It is an interesting time in the global construction insurance market. Generally, there is an increase in investment in construction, or at least a commitment to such an approach. Governments are stimulating their economies and future proofing their cities by spending on infrastructure and housing projects.
In this edition of Constructive Insight JLT’s global team of construction specialists discuss the global trends in the worldwide construction insurance markets, by region and across the key classes of insurance. We examine the impact of the increased activity within the industry on capacity and pricing of insurance coverage and consider how the claims experienced by insurers may also affect this.
Select a region below for market commentary
The global construction insurance sector continues to experience high levels of capacity and competition, despite record natural catastrophe losses in 2017.
Insurers had hoped that last year’s storms would trigger a meaningful change in market conditions. However, while placing cover for large construction projects in catastrophe-exposed areas can be more challenging, pricing overall is flat.
As we detail within this publication, there are some notable exceptions. The professional indemnity (PI) market has hardened in almost all regions. Insured demand for higher PI limits is occurring in an environment of a subdued appetite from insurers as a result of their potential exposure to claims from risks such as cladding systems and waste to energy projects. An increase in fire losses for timber-framed buildings has also resulted in construction all risk (CAR) price increases, while the failure of construction firm Carillion has led to more selectivity from construction surety markets.
Despite pockets of hardening, capacity in the construction insurance market remains plentiful and could be made available to meet growing demand from clients for more innovative products. This is starting to happen for inherent defects cover. Within this edition we consider how this insurance coverage is developing, not only in new regions but also to provide solutions beyond the traditional building works into with solutions available for civil infrastructure projects such as tunnels, bridges and rail structures.
Current market conditions mean that construction risks are being given increasing levels of scrutiny by insurers. The ability to demonstrate a proactive and embedded risk management process and a commitment to safety management can set a business apart at the time of programme negotiation. In this edition, Chris Merrifield, Director of Loss Prevention and Safety Consulting Services at Construction Risk Partners (a JLT Group company) provides insights on how companies can improve safety culture and leverage it to reduce total cost of risk.
As always we welcome your feedback on this publication and if there is a region or topic you would like us to cover in future editions please let either your JLT contact or I know.