Construction Insights: Cautious but strong outlook for construction insurance in 2023
The construction industry has been through a tumultuous few years. Covid-19, Brexit and most recently the Russia-Ukraine war have caused significant disruptions with supply chain issues, price inflation and restricted labour availability all causing delays and significant changes during construction projects.
Despite these challenges, the construction insurance market has fared reasonably well. The market that saw significant hardening in 2020 and 2021 has reached a level of stability.
There have been no recent withdrawals from the market in terms of insurers willing to write project and annual policies. Contractors All Risks (CAR) and Liability rates have only increased marginally in 2022, after more abrupt increases in preceding years, with excesses being little altered.
Insurers have increased their focus on underwriting profitability - a result of several high-profile and costly fires in the last five years. Insurers are also limiting their exposure by introducing a range of restrictions and exclusions– for example, cyber and heat conditions.
The general cost of labour and materials is increasing too, meaning the cost of claims has increased, and in turn, this means insurers will need to increase their rates.
In general, however, insurers are keen to support client relationships as existing policies expire and they are faced with higher premiums.
The Professional Indemnity Insurance (PI) market for construction has been very challenging over the last few years, but the resulting premium increases have refreshed the appetite of long-standing PI insurers, as well as enticing new entrants into the market.
Looking forward, the market is showing signs of vigilance towards modern methods of construction (MMC), particularly as regards offsite prefabrication, which insurers are cautious about when it comes to underwriting exposure.
As ever, an open, honest and timely conversation with your trusted insurance broker is our best advice.
The more time your broker has to fully understand your business, your risk profile and what might have changed since your last policy was written, the easier it will be to find the right package of insurance for you. There are even strategies that can be deployed to help reduce your risk profile and potentially lower your costs before approaching insurers if given enough time and information.
For an intelligent review of your risk profile and insurance costs, get in touch with our specialist construction insurance team today.
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