Positive ESG means extra PI cover for construction contractors

Construction contractors outside of the US will have access to additional professional indemnity (PI) cover based on their ESG performance as a result of a new collaboration between Marsh and specialist insurer Beazley. Marsh said it provides contractors with “a tangible reward in return for a positive ESG performance”.

The broker said the additional capacity is available globally to clients outside of the US that complete Marsh’s ESG Risk Rating (ERR), subject to their ERR score meeting Marsh and Beazley’s threshold. It explained that construction contractors that meet the underwriting criteria can qualify for an additional $1m in PI cover – 20% more on top of Beazley’s $5m maximum line – when they score six or higher on Marsh’s ERR.

Marsh said its ERR is an assessment tool that measures an organisation’s ESG performance, enabling them to identify their sustainability and climate-related risks and opportunities, and gain access to additional insurance market capacity. “Measured against more than ten internationally recognised standards and frameworks published by leading organisations – including the Global Reporting Initiative, Sustainability Accounting Standards Board, Task Force on Climate-related Financial Disclosures, and the World Economic Forum – the ESG Risk Rating scores a client’s performance across 19 ESG themes,” said the broker.

Kelly Looney, CEO, UK construction, infrastructure & surety, Marsh Specialty, said: “ESG concerns are a growing area of scrutiny for the global construction sector, and financial institutions are looking to ESG performance as a marker of sustainable and resilient businesses. Despite their best efforts, many contractors are not always able to satisfactorily display their positive ESG goals in a way that allows them to obtain meaningful risk and insurance benefits.

Looney added: “As well as being able to access additional insurance market capacity for professional indemnity risks, our contractor clients can use the results of the ERR to identify their most critical sustainability and climate-related risks, and build greater levels of transparency as they further develop their ESG strategies.”

Andrew James, focus group leader, large client professional liability, Beazley said: “We are focused on supporting construction contractors that prioritise ESG. Companies that look after the environment, their communities and have strong governance are also likely to be successful in managing and mitigating their risk landscape. A key role of a specialty insurer is to work with clients as they seek to improve their risk management, and we are pleased that for construction contractors that perform well against ESG criteria, we are able to support their efforts by offering them additional capacity.”