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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.


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The information given in this publication is believed to be accurate at the date of publication shown at the top of this document. This information may have subsequently changed or have been superseded and should not be relied upon to be accurate or suitable after this date.

This publication offers a general overview of its subject matter. It does not necessarily address every aspect of its subject or every product available in the market and we disclaimer all liability to the fullest extent permitted by law. It is not intended to be, and should not be, used to replace specific advice relating to individual situations and we do not offer, and this should not be seen as, legal, accounting or tax advice. If you intend to take any action or make any decision on the basis of the content of this publication you should first seek specific advice from an appropriate professional. Some of the information in this publication may be compiled from third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such. The views expressed are not necessarily those of Willis Towers Watson. Copyright Willis Towers Watson 2021. All rights reserved

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Global construction insurance market update PDF 6.7 MB

Jordy de Jong
Director Construction & Engineering & Machinery Breakdown

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