Why the construction insurance market remains competitive

12 January 2017

Demand for construction insurance is looking up in a market that is likely to remain highly competitive for the foreseeable future.

The energy sector and mining sectors – both of which have seen minimal construction activity in recent years with big falls in commodity prices – are now looking more positive with promising signs of increased investments. 

In the UK, the decision to leave the EU has had minimal impact on the construction market so far, despite the uncertainty around Brexit.

The global construction insurance market continues to be very soft, and is likely to remain so for the near to mid-term. Capacity continues to grow from both incumbent capacity providers and new market entrants with several new MGA’s entering the market. 

One of the biggest challenges in construction insurance, for both brokers and clients, is navigating the market’s inconsistent approach to terms and conditions, which can seem to change from risk to risk.

Whilst we at JLT pride ourselves on actively monitoring the market in terms of pricing trends, it is becoming more and more difficult to predict carriers’ likely response. 

Established markets are trying to maintain a minimum level of pricing. They are clashing with new entrants striving for premium volume, which in itself creates downwards pressure on rating levels.

The situation is further complicated by market decentralisation. The market is now broader and more geographically spread, and terms and conditions in regional markets can vary from the more established international market centres.

Topical tip for buyers

Our message remains consistent. If it is possible, enter longer-term contracts. We see no reason not to do so under current market conditions.

For further information, please contact Alistair Urquhart, Global Construction Market Leader on +44 20 7558 3323 or email alistair_urquhart@jltgroup.com