Construction Insurance: 4 key trends for 2022

man with hard hat standing in front of scaffolding - insurance for construction professionals

By Trevor McClintock, Executive Director, ABL Insurance


The construction sector is one of Northern Ireland’s core industries and healthiest, with outputs growing at a rate of approximately 8% annually. But this sector is also one with the highest level of risk for workplace injury and unfortunately fatality. Insuring construction businesses has always been challenging but over the past 12-24 months the industry is facing even greater difficulties.

There are four key insurance-related challenges currently facing the construction industry.

  1. A hardening market

Unfortunately, this has gathered momentum over the last two years, with the construction industry being among the first to feel the pinch through professional indemnity insurance.

The market became difficult due to several insurers suffering losses and taking the decision to exit the market. This created a reduction in capacity and therefore increased rates.

Another consequence was the commonly requested ‘Any One Claim’ basis of cover (where the policy will pay any individual claim which falls below the set limit).

This type of cover became almost impossible to acquire. Now, the market standard would be an ‘Aggregate’ limit indemnity – that is the policy will pay out any number of claims up to the set value only.

Restrictions in the scope of cover have exacerbated that hardening market. A typical example, which stemmed from the Grenfell Tower tragedy, is fire safety limitations becoming standard. In the worst situations, some insurers have been unable – at any price – to obtain the level of cover that they once carried.

  1. The interim Ogden Rate

A second, uniquely Northern Ireland challenge is the impact of the interim Ogden Rate and its possible further impact on liability insurance.

The Ogden Rate is used by the courts when calculating compensation and personal injury cases. It was designed to ensure claimants were not under or overcompensated. This adjusts the personal injury damage award to account for the return expected over time when a compensation sum is invested.

The dilemma has arisen here, because, in March 2021, the Northern Ireland Department of Justice announced that it will change the personal injury discount rate on an interim basis, from +2.5% to -1.75%. This will significantly increase settlement payments made in personal injury claims, which incorporates loss of earnings and/or care.

The effect on the settlement payments can be counted, in some cases, in multiples.

This is out of step with the rest of the UK and also with the Republic of Ireland. Awards for the same injury here would be significantly higher than in any other region.

Insurers are going to have to account for this in their premium calculations for liability insurance.

In the last few weeks there has been a positive development. The Damages (Return on Investment) Bill prescribes a new statutory methodology to be applied by the Government Actuary to calculate the Discount rate.

This Bill which has recently received Royal ascent, provides for regular reviews of the Discount rate. The first review, will be a review of the present rate of -1.75%

While the Northern Ireland rate has yet to be confirmed by the Government Actuary, the methodology is based on the Scottish model. A rate of -0.75% has been set in Scotland and it is anticipated that the new Northern Ireland rate may be fixed at a similar level.


  1. All Risks Insurance and the increasing ‘information burden’

The third issue to be aware of refers to property, particularly, with relevance to contractors and ‘Contractors All Risks’ insurance. This has been impacted by the hardening market both in terms of a rate increase, but also in the more granular level of information required by insurers.

Timberframe construction also makes many insurers very nervous and some will not write this area of business.

  1. Cybercrime

Finally, in common with all businesses, construction companies are not being spared by cybercriminals. We have seen an increase in both the frequency and severity of ransomware attacks recently and Insurers are looking for a high level of cyber security maturity within a business before offering Cyber Liability terms.



So how does a construction company best prepare for these insurance challenges?

One of the key things is the importance of acting early and working with an experienced brokerage with specialist knowledge of the sector.

The renewal process should begin at least 90 days before a renewal date, giving your broker plenty of time to work with you on ways of mitigating and lowering your risk profile and sourcing alternative suppliers if needed.

As a business with an integrated risk management service, we can help your business overcome many of the hurdles to achieving the right level of coverage and often lower the cost of your premium with a more affordable investment in risk management, health and safety audits and training.

Also, your coverage and your price are very much dependent upon quality information and the expertise on how it is presented. That’s where ABL, as an expert in construction industry insurance, comes into our own.

We know how to fully research and understand a client’s risk profile and how to expertly present this to an insurer. Our job is to sell your business and its risk profile to an insurer and to convince them of the attractiveness of you as a client.


At ABL we have exceptional sector expertise, an integrated risk management service and the widest range of insurer choices (thanks to our exclusive partnership with GRP Group).

It’s all part of what sets us apart from other Northern Ireland based construction insurance brokers and it’s why so many of NI’s top construction firms choose ABL for all of their insurance needs.


About the author:

Trevor McClintock has almost 30 years of experience in insurance, much of that spent as an Insurance Account Director for leading Northern Ireland construction companies. Trevor is uniquely experienced and is often called on to provide advice on insurance issues to government officials at the highest level.