Construction Insurance Market Update – Q1 2018
Your source of construction insurance market trends and analysis from Q1 2018.
Market conditions have started to transition for construction risks in the first quarter of 2018. A number of insurers have reviewed their pricing and coverage models and are looking for wholesale increases; whilst new entrants continue to enter the market providing aggressive alternative options on well managed risks.
The release of a number of multi-billion dollar infrastructure projects to the market over the last 12 months has helped to balance insurer books, for the time being. However, this could just be the calm before the storm, once losses from these projects eventuate.
- 2017 saw the end of the competitive insurance environment with the majority of insurers beginning to remediate their annual construction portfolio.
- Increasing claim costs and a low interest rate environment are impacting insurer returns.
- Insured global natural catastrophe (property including construction) losses for 2017 currently estimated at USD 134 billion making it the second costliest year on record.
- Local authority of many insurers has been reduced, with head office in Europe/USA/London ultimately responsible for many decisions.
- Risk selection will continue to be a focus, with particular attention to:
- Claim performance
- Natural catastrophe exposure
- Risk quality and detailed engineering data
- Coverage extensions and deductibles.
- Project construction opportunities still in high demand with market appetite at an all-time high.
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