Construction industry market outlook
*This article was originally written by our North American colleagues for a U.S. audience. We have shared this article for informational purposes only as it may be of interest to our global clients. Please speak to your local office contact to further discuss any of the points raised in this article.
In the last quarter of 2023, we expect less volatility and unpredictability and in many areas rate increases are finally easing after 5 years of a continuous hard market. We are also seeing consistent themes within the global insurance marketplace and more regions continue to experience stabilization with flat or single to low double-digit rate increases.
-
01
Market update
As we have observed improved pricing conditions, coverage, and capacity for most commercial lines of business, we have seen the exceptions for Natural Catastrophe (Nat Cat) exposed projects and projects/risks and renewable programs with poor claims experience, lack of robust risk management plans and prescriptive formal loss mitigation protocols. Challenges are still notable globally in professional indemnity (PI) project specific professional liability less on annual programs, decennial, inherent defect liability (IDI) in Europe and auto in the U.S., with continued limited capacity, increases in rates and deductibles in most type of projects where self-retentions are becoming more common particularly on excess layers. Additional capacity has re-emerged in the excess liability market in the U.S. and the construction all risk/builders risk markets in London, Asia and Europe that previously exited but are now reconsidering a return after years of compounding increases in rates and profitability.
Learn more keyboard_arrow_right -
02
Women in Construction
Creating a more diverse and inclusive construction workforce takes time but there are actions we can take now to inspire the next generation. The industry has a great number of career and educational pathways that lead to success. The mission of our WTW Women in Construction Network is to connect and elevate women throughout the construction industry. Some of the highlights discussed during the session at the conference:
- It’s important to champion inclusion that empowers us to reach our full potential, while fuelling innovation and connection with our employees, clients and communities.
- Industry leaders should harness and leverage the capabilities as well as the global reach of the construction industry with purpose of cultivating diversity, equity, and inclusion.
- It’s essential to drive engagement and collaboration between industry representatives that can inspire transformation.
- People thrive in different environments requiring diverse structures and flexibility. And culture is really important to allow women to feel part of the industry.
-
03
How contract terms can impact claims recovery
Construction projects have become more complex, resulting in unique challenges and risks. Often projects are exposed to risks arising purely from contractual and legal obligations, unconceived circumstances, or natural hazards. Identifying and addressing those risks, while implementing risk mitigation claim strategy through the lifecycle of a construction project can lead to a positive outcome. But this process needs to start on day one of the construction project.
Learn more keyboard_arrow_right -
04
Excess Liability
The lead umbrella market continues to be controlled mostly by the insurer that writes the primary casualty lines. Capacity for un-supported lead umbrellas (when a different insurer writes the primary casualty) remains slim, however some markets have expressed a desire to offer capacity for best-in-class contractors. Additional capacity has reemerged in the excess market after years of compounding increases which has made the market a more enticing environment to compete for business. Often the lead umbrella/ excess pricing can dictate what insurer is the most competitive in a marketing process. Additional umbrella/excess capacity is more prevalent due to recent increased primary attachment points particularly in auto liability.
Learn more keyboard_arrow_right -
05
Safety
Safety is about more than protecting yourself. It is equally about holding paramount the safety and health of others so that they can work and live their most productive life. There are thousands of construction sites in operation across the U.S., and each one presents a certain set of hazards that need to be accounted for. The importance of safety is indisputable and the benefits of having a safe construction site go far beyond the obvious. Construction is an inherently dangerous profession. Practicing proper health and safety on the job site will do more than protect workers and the public. The right processes and procedures will also benefit your business by helping you stay compliant, respond more quickly to incidents, preserve your bottom line, build your brand, enhance your reputation, and help recruit and retain talent. Construction has made significant strides in protecting the industry’s workers from physical harm. There is a need to look at workers’ health and safety more holistically, addressing not only physical welfare but mental and emotional well-being as well.
Learn more keyboard_arrow_right
