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Q3 Global Marketplace Insights – Construction

2023 Market Insights

October 17, 2023

Bill Creedon, Global Head of Construction, and Maria Sanchis, Global Head of Construction Broking, discuss the current market conditions for the construction insurance marketplace.
Global Construction market insights

Hear from our experts and learn more about the latest insurance marketplace trends


Global Construction market insights

Welcome to WTW's Global Marketplace Insights series, where our experts bring you the latest risk and insurance perspectives.

Hello, I'm Bill Creedon.

I'm the Global Head of Construction for WTW.

I'm here with Maria Sanchis, Global Head of Construction Broking.

And today the two of us really want to walk through our Q3 global marketplace insights for construction.

Maria, I've looked at a lot of the material.

I've talked to a lot of markets.

I'm getting a general sense that trends are positive around the world.

What's been your observation on that?

I definitely agree Bill.

After five years of hard market we are really seeing around the world that rate increases are definitely easing and we are seeing signs of stabilization.

You know I see that there are areas that are still problematic.
There are definitely challenging areas.

We are seeing still increases and foresee increases in wood frame projects definitely in Nat-cat exposed areas but not only wind also wildfire and flood and especially after a very eventful year of catastrophic events already in 2023.

And then we're seeing also pockets in certain areas like for example auto in the US EU and PI especially not so much in the on the annual program. What’s PI? Professional liability, more on the professional liability not so much in the annual renewable projects and programs but on the one off.

So project specific professional liability.

We are seeing still some just lack of appetite from the market especially on the excess layers, right.

You know you bring up a point that around you talked about the impact of catastrophic losses or catastrophic events in 22.

We had a number of hurricanes at the end of 22 that impacted the reinsurance treaties that ultimately impacted the market.

What's your take?

Do you anticipate seeing some of that coming up?

We're seeing definitely similarities obviously now it's really we'll see some for those treaties and with all the catastrophic weekends that we've seen already, we foresee similar, maybe not as high in terms of increases, but definitely very sluggish appetite from the markets and really many insurers taking a portfolio view and reserving even that capacity for group clients as it's very limited.

And when you explain that a little bit, when you say reserving the capacity for group clients, what does that mean?

So markets, I think that the trend as well this year and for many regions from their feedback is that they really are taking a portfolio view and really we're reserving their capacity for those clients that are within the group and actually can offer capacity and many various lines of business and within various regions as well.

So when you say within the group you're saying that markets that are writing contractors annual programs? Correct, they will favor the one off projects for example, they will favor you know their GL programs, you know in Europe, you know they will favor the construction all risk if they write their decennial program.

So they are really taking that portfolio view of their clients and they're really choosing them also for their reputation, and creating those long lasting robust kind of relationships and that's really where the Nat-Cat capacity is really being reserved.

I know you have a global perspective.

As you look at the different geographies around the world, are there any that are maybe seeing more of that impact than others or is it across the board?

I would say across the board, but definitely US obviously where the values are so high in terms of insurable values, obviously Florida, Caribbean, Gulf of Mexico, but also obviously Canada with the wildfires and we've seen so many catastrophic losses in that space.

You know, we are also seeing you know, earthquakes in Turkey, you know, exposed earthquake area.

So I would say obviously where there's insurable assets, you know, that's going to have the biggest impact and that would definitely be around the US. You hit another point just there, you mentioned general liability and that makes me think of excess liability programs.

The excess liability programs have been problematic for a lot of contractors around the world.

What’s your take on that right now?

I think that now at the pricing point where we're at, we are seeing some re-entering capacity mainly markets that write the primary are really seeing a little bit more appetite in getting into that excess layer space.

So we are seeing a little bit more not only appetite by willingness to really enter those programs.

So I think it's good news for our contractors in that respect.


How about the mega projects, I think you know used to be a big project was $100 million.

Now we're seeing projects in the 10s of billions.

How's that impacted impacting the marketplace and how does it impact how a broker and their client puts together a program?

It is a challenge, but you know we are getting used to it.

We've seen mega projects this year, especially in the technology space, but even projects that you know were very traditional even five years ago have doubled in terms of a replacement cost and values.

So this is an ongoing problem not only for, for mega projects.

I think that the strategy in terms of how to access that capacity is quite important from the really early stage and realizing that there's going to be obviously elements of loss limits that will be imposed in those projects as getting to full value you know when projects reach over 4 or $5 billion, you know it is a challenge and recognizing that from the beginning and really getting to a price point where we can get credible lead lines.

And then in a way really look at the whole marketplace as a whole and use the local market, regional market and then reinsurance whether it's in London and or other parts of the world to really compete.

So it's really looking at the capacity globally and access it in the right way to get the best results.

We always try and think through. There's always a lot of information.

Everybody puts out information, we're putting out information right now, but what would you take out of the information we're looking at the marketplace we're in?

What are some actionable insights you could tell a client right now that we should do or a broker partner to really get into the market and get the best program for that client?

Are there actions they could do around some of these things?

I think so.

I think it's from the development phase of the program and for the project as well.

And also when they are in terms of negotiating the contracts among the parties, I think risk allocation is quite important.

Insurers look at the risk allocation and the contracts not only the insurance obligations but how the risk are actually allocated among the parties.

And they do expect that you know each party that can mitigate and handle the risk the best should have that risk allocated to them.

So I think that that's quite important that is being looked at you know in a more detailed way by the insurance market.

And so would that be certain that we're presenting that with transparency.

I think transparency is quite important.

I think now after COVID face to face negotiations, I think especially on the large and complex are quite important to have that proximity and familiarity with the risk that we spoke about and also creating those robust relationships that are long term. And to talk through the risk programs and what's being done. Correct.

So it's not data dumping which a lot of time these mega projects and I would say some brokers and some markets complain about the influx of information.

We really need to as brokers chew that information and present it in the best way possible to the market.

We're very into data, looking at things differently and trying to help the markets with their evaluation.

Are there risk and analytic technologies?

We are using risk analytics not only in one of projects, but also on portfolio views for some of our major clients in terms of their assets.

And also actually, we're looking at vulnerability depending on the face of the project, which is quite important.

We divide it into 5 phases and obviously you know between phase two and three before the projects watertight and before a lot of the electrical, mechanical and Fire Protection safeties are put in places when projects are more vulnerable, not sometimes so much as we think at the end of the project when the values are more exposed.

So we really are looking at very analytical way on those limits and actually sharing that information and being very transparent with the markets as well.

So we kind of share their views on possible maximal loss to our analytical view of how we see it to get that price point in terms of limit. And would we run models on a specific project and say here's when it would be exposed to? We can do that. Obviously most projects are multi year.

We have a lot of experience doing that in high exposed Nat-Cay areas obviously where the seasonality is quite important.

So we do take obviously some of these are faced handover, so we do need to take very precise valuation of the values and how they're exposed through the seasons.

Because what we're trying to do is explain to the markets they may have less of a risk even though they may think it's a three-year project, they may be only hitting two hurricane seasons or something to that effect.

And because we know that in certain areas they have accumulations that helps them also and how they manage their accumulations in an area.

Sometimes a project might not be completed, but the exposure might change through the facing of the project as well.

Maria, thanks.

Thanks for joining me today.

Thanks for presenting some really good insights into the marketplace today.

It's been my pleasure.

Thank you.


Bill Creedon
Global Head of Construction

Maria Sanchis
Global Construction Broking Leader

Maria serves as the Global Construction Broking Leader and in her role, she is responsible for coordinating WTW’s global construction broking efforts and resources across all product lines and coverages. Maria has over 20 years of industry experience holding senior roles across our major geographies, including Spain, London, Latin America and Miami in the retail and wholesale space. In more recent years, Maria was the Construction Regional Leader for Latin America and part of the Global Executive team supporting our Western European team.

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