Construction insurance buyers can expect more innovation and continuing lower prices in 2016.
Increasing competition in the construction insurance market is resulting in greater creativity, both in terms of product and service offering.
In 2016 construction underwriters have shown more willingness to develop new products and coverage and are receptive to new ideas. London market underwriters, in particular, are leading the field in terms of innovation and product creativity.
In the course of 2016 insurance buyers can expect to see new products that look to address their risks, including those that go beyond physical exposures.
This year has seen yet more capacity enter the construction market, through new entrants and established players increasing their capacity. Unsurprisingly, high levels of capacity continue to drive competition.
The latest signs of softening to emerge have been insurers’ willingness to accept lower deductibles and offer value-added services, such as enhanced risk management and claims handling.
Despite economic slowdown in some emerging markets, demand for construction insurance in the London market remains high. Sharp reductions in commodity prices have hit activity in the oil and gas and mining sectors, resulting in a decline in premium volumes for insurers in these sectors. Infrastructure projects continue to provide a strong flow of business.
There has been talk of a bottoming of market terms, but so far we have seen little evidence of this.
Cracks are appearing in some regional markets where international players are becoming more selective or are pulling back, which we understand is a direct result of poor results.
The construction market is now so fragmented, with an ever-increasing number of markets willing to write the class of business, that any push for an increase in terms will be challenging and is likely to be met with resistance.
Rate reductions are still prevalent and clients can expect to see this throughout the remainder of 2016.
Tip for buyers
Whether the market is soft or hard, clients should continue to get directly involved in their insurance risk transfer. Those that take the time to meet insurers and present their risks will find carriers respond more positively.
For more information, please contact Alistair Urquhart, Head of the Construction Broking Team on +44 (0)20 7558 3323 or email firstname.lastname@example.org