Notes on the State of the Construction Industry Insurance Marketplace

Recent headlines from industry and trade publications such as “Challenges Mounting as Construction Insurance Market Continues to Harden” from Insurance Business Magazine or “Underwriters Get Picky: 5 Trends to Watch in Construction Insurance” from Insurance Journal paint a picture of the challenges faced by the construction industry. Our clients have dealt with the fallout over the last year resulting from the economic downtown caused by COVID-19, and before that an increase in claim severity caused by both social and medical inflation, labor shortages, material costs, etc. As an insurance brokerage, Rose & Kiernan, Inc. has been doing our part to communicate with clients and our carrier partners to set realistic expectations and get out in front of the challenges that they face.

We recently hosted a webinar with our friends at the Eastern Contractors Association (ECA), a trade association of general contractors, subcontractors, suppliers, and service firms engaged in commercial, industrial, and institutional construction throughout eastern New York. We’d like to share a few key points and takeaways here.  

Market overview

Overall, the construction industry insurance market is in a firming trend. This trend can be seen throughout the entire insurance marketplace, but it is much more concentrated in high hazard classes, such as with construction. Four major lines of insurance coverage for contractors include workers’ comp, general liability, auto liability and excess liability. Of these, the umbrella and excess marketplace for construction remains extremely challenging with significant rate increases, restrictions in coverage and capacity issues. We are also seeing coverage restrictions with general liability, but capacity remains steady. The auto liability market continues to see retention increases, though coverage and capacity remains steady. Workers’ comp remains the most stable of the coverage lines with rates, retention, coverage, and capacity holding steady.

Key takeaways

Keep in mind that in a hard insurance market where rates are going up and capacity is decreasing, a larger emphasis is being placed by underwriters on evaluating risks. Insurance brokers are an important ally for help with insurance coverage, account marketing efforts and risk control strategies. When it comes time to renew your policy, look at whether or not your current carrier is looking to be flexible in structure along with the safety efforts and processes used by your organization. Also, look at their impact in the overall renewal discussion. Lastly while shopping for the lowest premium is often the focal point, keep in mind that the best way to lower cost over time is to reduce both the frequency and severity of your claims through a robust safety program.

Despite all these challenges, construction business is definitely rebounding post-pandemic. If you are in construction industry and would like some help or more information, contact the R&K team here or by calling (800) 242-4433. 

Post a Comment

Your email address will not be published. Required fields are marked *

Related Posts

Social inflation verdicts happen in a courtroom, which is shown in this photo.
The Trend Toward Social Inflation Verdicts and their Impact on Liability Costs

In the insurance world, social inflation leads to rising litigation costs and their impact on insurers’ claim payouts, loss ratios, and, ultimately, how much policyholders pay for coverage.

Read More

umbrella and excess liability
What Rapid Changes in Umbrella and Excess Liability Markets Mean for Policyholders

One topic that we are following quite closely at Rose & Kiernan, Inc. are rapid changes in umbrella and excess liability markets and what these changes mean for policyholders.

Read More

rk blog - heavy manufacturing risk
Insurance Challenges and the Heavy Manufacturing Industry

The heavy manufacturing industry has started to rebound from the COVID-19 pandemic, but they have another issue that needs addressing – a lack of interest from insurance carriers to take on risks presented by the industry overall.

Read More