Global construction market update

A construction worker safety helmet or hardhat is placed on rooftop of the tower with background of city during orange sunlight shade. Industrial working PPE, safety in workplace scene.

Global macro trends point to an encouraging outlook for the construction sector.

Investments in both new and existing infrastructure and technology, the rapidly evolving energy transition, actions to address the practical impacts of climate change, the reshaping of supply chains, and other indicators all offer reason to be confident about the construction industry over the longer term.

In 2023, a tightening interest rate environment, broader input cost uncertainty, and a lack of confidence in some regions delayed anticipated spending. In addition, the expected slowdown from growth rates in 2021 and 2022 materialised.

A combination of insurance market capacity withdrawal over the past five years and the inflationary effect on project values has greatly reduced capacity adequacy compared to the beginning of the tightening global market. Over this period, we saw a reduction of as much as 42% in the availability of global construction insurance, with resulting impacts on pricing and terms and conditions. Nonetheless, the sector is increasingly viewed as attractive, and the direct and reinsurance market broadly understands the long-term opportunities available.

Global construction market update

GLOBAL UPDATE

Treaty renewal outcome

Since 2019, insurers focused on construction and engineering risks have taken steps to address poor underwriting results. The impact of these changes is now becoming evident, with underwriting results in the past five years looking markedly better than in the several years prior.

There was little increase in (re)insurer capacity at the January 1, 2024 renewals. Reinsurers remain alert to the continued deterioration of underwriting results prior to correction actions being taken since 2018, and while pricing remains stable, this premium is diluted by losses from prior years that are still creeping out due to inflation, COVID-19 delays, and supply chain friction.

Renewal treaty pricing was considered flat to 5% improvement for loss-free programs. A buoyant reinsurance market secured renewal outcomes per their plans for most construction and engineering insurers. Excess of loss programs renewed at expiring attachment points, with capacity sufficient to meet insurer needs. Market start-up activity or re-entrants started to see an improved pace and we expect a number of modest market entrants through 2024.

Global insurance markets

The latest Marsh Global Insurance Market Index can be read here.

Work on high-altitude equipment. Worker fall arrest device with safety belt hooks. ai generative

Builder’s Risk

Supervising Road Construction Work on an Expressway Project: The Role of a Civil Engineer. Concept Road Construction, Expressway Project, Civil Engineering, Supervision, Role of Engineer

Liability & Casualty

workers wearing hard hats and protective gear in construction and manufacturing.

Professional Indemnity

Surety

Architects working with team of experienced professionals with conceptual 3D model building design with developers, contractors, and subcontractors

Cyber

This publication is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors. Any modelling, analytics, or projections are subject to inherent uncertainty, and any analysis could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change.

LCPA 24/161

“Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.”

Global construction market update