Construction All Risks
Recent regulatory changes will increase the focus on inherent defects liability for real estate sector. No local market capacity or expertise means that this product will continue to require active participation from international underwriters.
Local market coverage is still restricted for wet and underground risks so projects exhibiting these risk factors also require the input of international insurers. Some large metro, irrigation projects etc. have been placed in the past year and the loss experience for these will have an impact on market rates in the short term. The active involvement of lenders will dictate that coverage is likely to remain broad.
With the new central government, we have seen approvals/announcements of new projects which are now entering into execution stage. Demand will therefore increase in 2018 and international market experience and capacity will have a bearing on future rates.
Construction liability is still part of package construction policies in India and the breadth of coverage offered is restrictive.
In the absence of any major claims, contractors are not normally prepared to discuss buying broader coverage. However some larger contractors and employers are increasingly considering opting for a more specialist standalone construction liability with broader coverage.
There has been increase in demand from employers for this cover primarily due to lender requirements and increasing professional risk exposures. The local market’s capacity is limited and hence international markets play a major role in pricing.
Motor, Plant & Equipment
As with construction liability cover, limited coverage in packaged construction programmes has caused increased demand for standalone plant and equipment coverage. Rates are stable.
We have seen drastic reduction in marine premium in last two decades. The market is now stable and insurers are now considering the application of risk management processes applied by clients applied by clients to control claims.
Apart from over dimension cargo the rates are still competitive and coverage enhancements are available with very little impact on premium.
Due to historical reduction in rates and current market capacities many clients are currently looking to take additional coverage, in particular marine delay in start-up.
Demand for increased limits is being met by increasing market capacity. Brokers have played a very important role in increasing the awareness in the market.
Markets are soft due to the favourable claims experience in the construction industry due to which there is a continued reduction in premium rates.