European construction buyers face tough market but signs of stabilisation

The construction insurance market remains tough for buyers in Europe but there are signs of stabilisation on the continent, according to WTW. It adds that UK companies face continued hard market conditions. While the extent of challenges faced by construction insurance buyers will vary across global geographies, WTW expects the overall marketplace to continue to tighten throughout 2023. Its Global Construction Rate Trend Report – Q1 March 2023 says certain high hazard exposures and contractors with challenging risk profiles will continue to experience rate increases, but the pace of these rises will be tempered as the market improves. According to WTW the trend in Europe is towards market stabilisation. “Signs of stabilisation continue to be reported, and indeed we see some optimism for lower increases and even softer correction in 2023. However, this is not consistent across the region and in general hardening trends continue, particularly as economic and political pressures continue to impact,” explains the broker. It says buyers face ongoing difficulties around key risks such as defects, maintenance, natural catastrophe and professional indemnity. The broker reports that rates for general liability, excess cover and annual construction all risks (CAR) are all up between 0% and 15% for European construction firms. Single project CAR rates are flat to up 20%, while professional indemnity cover is up 5% to 15%. The good news is many markets in Europe are reporting new players and insurers reinforcing their teams. Therefore most risk managers can access “ample capacity and appetite”, particularly for medium-sized projects, domestic works and those in the renewable sector, says WTW. It also notes that longer response times throughout the placement and renewal processes remain for large and complex risks. “As reported in our last review, more insurers are needed to complete risks as they limit their share with a more conservative overall perception of certain risks, especially those with tunnelling, wet works, delay in start-up or nat-cat exposures,” says the report. It adds that defects and maintenance coverage is still attracting “intense scrutiny” in Europe, and as a whole the market continues to voice growing concerns over reinstatement values and longer construction periods. The broker’s report says the hardening construction market dynamic continues in the UK. “Reductions in insurance premiums and broadening coverage experienced over the previous two decades has now made way for more restricted policy coverage. This is combined with increased rates and deductibles/excesses, as the markets seek to mitigate its increasing exposure,” explains WTW. It says that general liability rates are flat to up 5% for construction buyers in the UK market. Non-cat annual and single project CAR rates are flat to up 10%, with non-cat erection all risks rates also flat to up 10%. The report adds that recent reinsurance renewals saw a “flattening” of global construction capacity to approximately $4bn. But it says that insurers aren’t using their capacity for a vast majority of risks so actual capacity is considerably lower. On 7-8 June 2023, Commercial Risk will host its fourth Construction Risk Management Conference in Europe. For more information about attending, speaking or partnering please visit: https://events.commercialriskonline.com/CRM-Europe-23

European construction buyers face tough market but signs of stabilisation

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