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Global construction insurance market update

August 12, 2021

As we emerge from Q2 2021, the construction insurance market has aligned with many of our predictions from earlier in the year. Read our latest update here.

As we emerge from Q2 2021, the construction insurance market has aligned with many of our predictions from the early part of the year. Rate increases continued for most lines of coverage while coverage remained challenging in several others, but at the same time, we have seen signs of late cycle underwriting behavior in some key lines of cover. While not a softening market per se, rate increases have begun to moderate in many lines with a few notable exceptions (cyber being the highest profile) and we expect that this will continue through the end of 2021.

  • As predicted, the market is clearly differentiating between accounts with good loss experience versus those with more challenging ones. Underwriters are looking back several years (often 7 to 10 years) to determine how they view historical profitability.
  • Property including contractors’ all risks (CAR) / builders risk (BR) has significant capacity in most regions outside of catastrophe areas and rates are moderating to in some cases flat to year end 2020.
  • For casualty lines (outside the U.S., motor, general liability, excess liability, etc., inside the U.S. including worker’s compensation) the story is different between primary and excess placements. Primary annual programs are attracting competition to the extent that a flat result from 2020 is not uncommon with some rates decreasing for better risks. For excess liability, rates continue to rise but at a slower pace than earlier in 2021. Notably, requirements for higher attachment points for first layer excess programs have remained in place and likely will remain at these new elevated levels in the future even as the market moves into a softening mode.
  • Professional indemnity (PI)/liability coverage, which was the first significant line of coverage to harden in most regions, remains difficult but has begun to stabilize from a rate standpoint. However, capacity has not returned in most markets notably London.
  • From a coverage perspective, we continue to see difficulties in London Engineering Group (LEG) and delay in start up (DSU) for CAR/BR coverage and the delays caused by COVID-19 have created questions on when a delay began and if the cause is covered. We expect courts will continue to look at COVID-19 claims for many months or years but to date, more rulings have benefited insurers.
  • For casualty coverages, coverage restrictions have tended to focus on shortening limits particularly in excess towers with the growth of project specific liability (CIP) policies and programs. This trend has reduced capacity for excess towers for North American contractors who were accustomed to excess of wrap coverages throughout their master towers. This is much more difficult now as insurers focus on not potentially duplicating limits on the same project

How should construction risk managers respond?

Utilize analytical tools to evaluate efficacy of current program structure
Prepare for continued increases in insurance pricing

Evaluate adequacy of insurance changes embedded within bids and contracts

Consider alternative risk transfer (ART) program structures

Begin discussions regarding viability very early, as much as a year prior to renewal, as utilization of ART structures may involve a lengthy educational process for internal stakeholders, owners and insurance partners.

Continue to develop and strengthen relationships with incumbent insurers

Take time to develop new relationships. Off-cycle market meetings with incumbents as well as potential alternative insurers are valuable.

Begin the renewal process a minimum of 180 days prior to program expiration
Work in conjunction with your insurance broker to develop comprehensive and accurate renewal data
Evaluate project schedules related to project placements

If a project has been delayed for any reason and will require the extension of any insurance placement, begin this process as early as possible. Project extensions have become challenging to obtain and can be quite costly

For more details, please download the full report below.


Willis Towers Watson is an insurance broker, and gives its views on the meaning or interpretation of insurance policy wordings as brokers experienced in the insurance market. Insurers may take a different view on the meaning of policy wordings. Any interpretation or thoughts given are not legal advice, and they should not be interpreted or relied upon as such. Should a legal interpretation of an insurance contract be required, please seek your own advice from a suitably qualified lawyer in the relevant jurisdiction. While all reasonable skill and care has been taken in preparation of this document it should not be construed or relied upon as a substitute for specific advice on your insurance needs. No warranty or liability is accepted by Willis Towers Watson, their shareholders, directors, employees, other affiliated entities for any statement, error or omission.

For more information, please contact local entities of the Willis Towers Watson Group:

Willis Insurance Brokers Co. Ltd. | Willis Hong Kong Limited | Willis Towers Watson India Insurance Brokers Pvt. Ltd | PT Willis Towers Watson Insurance Broker Indonesia | Willis Japan Services K.K. | Willis (Malaysia) Sdn Bhd | Willis Towers Watson Insurance Brokers Philippines, Inc. | Willis Towers Watson Brokers (Singapore) Pte. Ltd. | Willis Towers Watson Insurance Korea Limited | Willis Towers Watson Taiwan Limited | Willis Towers Watson Vietnam Insurance Broker

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Global construction insurance market update PDF 6.7 MB

Head of Corporate Risk & Broking, Hong Kong & Macau

Iris has over 20 years of construction related insurance industry experience and has held various senior positions with major insurance brokers, focused on construction projects in Hong Kong, Macau, China, Singapore, Malaysia, Vietnam, Indonesia and North Mariana Islands. Iris is always seeking innovative risk transfer solutions for infrastructure, superstructure, hospitality, power and petrochemical projects in the region. Her core expertise includes contentious claims handling, lender advisory, risk analysis, insurance broking, and managing self-retention insurance programs and captives. Iris specializes in driving new business, designing project-specific and annual renewable insurance programs for mega-sized infrastructure and building projects from the construction phase to interfacing with the operation phase.

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