Construction All Risks
Premium rates have continued to fall for Technical Risks/Construction All Risks programmes in France. Indeed rates as low as 1% are being applied to some projects.
On average, the market has experienced an almost 50% reduction over the past five years across all classes of construction insurance. This is the result of vast capacity and the emergence of new insurers (or new participants in the construction space), some who are aggressively seeking to grow their client base.
As a result of the lack of capacity, and therefore competition, rates remain high for specific risks such as drilling and offshore construction.
While the majority of clients are experiencing price stability, some insurers are looking to reduce coverage. Construction companies need to work closely with their broker to understand any change prior to renewal and ensure any changed terms or conditions are appropriate for their business.
The trend in engineering is towards a tightening of conditions for those clients who have experienced claims, operate in an industry segment which has made claims or for risks in more exposed business sectors.
The construction insurance market is becoming increasingly technical and so it is important for brokers to be able to articulate the risk and risk mitigation strategies of clients to achieve the best results.
As a result of the reduction of insurable assets there is a surplus capacity in the French market; overall capacity is in excess of €1bn.
While mergers impacted the number of insurers underwriting this class of insurance they have not reduced the overall capacity - some of key insurers continue to operate under their own reinsurance treaties.
In addition, new insurers have entered the market Civil Liability insurance locally.
There are some insurers who have reduced the capacity they provide for Professional Civil Liability insurance, indeed some have withdrawn completely.
Motor, Plant & Equipment
Insurers impose large excesses or self-insured retentions on companies’ who have a large number of vehicles. Generally, this is managed by partial or total self-insurance (without transfer to the insurer) or significant Civil Liability excesses.
The trend towards an increase in excess levels (especially for large fleets) enables a self-insurance system to be set up as risk transfer increasingly becomes a dollar swapping exercise.
Some insurers are willing to reinsure self-insurance funds providing additional protection to clients should their claims performance be unexpectedly poor.
The market has contracted slightly however insurers are still looking to build provisions for future significant losses.
That said, rates remain stable as the insurers proceed with caution so as not to lose market share.
The French Directors and Officers Liability insurance market remains very competitive with a large number of insurers and significant capacity – theoretically over €400m locally, or in excess of €800m including the London market.
Fierce competition and the pressure placed on premiums by insurers in the last few years have resulted in premiums remaining stable at low rates. The impact of mergers and market consolidation was initially negligible.
There continues to be signs that the market may change in the short to medium term. Rising loss ratios, the emergence of major risks and stricter "Ethics and Compliance" regulations may lead to an increase in secondary claims against directors. As such insurers are considering the emergence of trends before they adjust their underwriting approach.
Modest reductions remain available for clients who have not experienced claims and can demonstrate an embedded risk management culture.