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Construction: 2021 Pacific Insurance Market Recap Report

In 2021, the Pacific construction insurance market experienced similar challenges to the global construction insurance market, yet there were positive signs that “new” capacity was starting to return to the region. We look at key coverage and underwriting trends, the the influence of ESG concerns, and the outlook for 2022.

30/03/2022 · 2 minute read

Report summary

Global Construction Market Snapshot

During 2021 we saw signs of rates stabilising for the Construction Insurance sector, but insurer capacity remained tight. Insurance placements remained challenging for projects requiring large limits or with heavy exposure to natural catastrophe risk. Tough insurance market conditions continue to exist for many companies across several regions and challenges remain for single project placements for developers and contractor annual programs. 

Alignment of terms across the major global markets via a greater level of underwriting discipline across the insurer’s portfolio is resulting in increased consistency of pricing and coverage offered. With less authority granted to them, underwriters have struggled to deviate from core ‘traditional’ coverages for construction risks and have struggled through the terms offered to build in and differentiate different risk profiles presented to them by clients. 

Cumulative increases for annual placements began to slow throughout 2021.While many accounts continued to experience minimal increases, insurers continued to focus on the wording restrictions, targeting coverage for infectious disease (driven primarily by COVID clauses), “silent” cyber, customer/suppliers extension triggers and claims preparation costs.   

Coverage for project placements continued to trend upwards but also at a slower rate than has been experienced in the recent past. Projects exposed to natural catastrophe risks have the greatest challenge.

Pacific Region Construction Market

The Pacific region experienced similar challenges to the global construction insurance market, however there were positive signs that “new” capacity was starting to return to the region. We also saw price increases in Contract Works Material Damage flatten significantly towards the later part of 2021. Financial and professional lines also experienced reduced increases across their portfolios. 

All composite lines of insurance (including property and casualty) showed a reduced or flattening trajectory. 

For more detail, including helpful pricing graphs and tables, please download our full report below. 

Construction works (CW) insurance

Insurers continued to look to rectify their book through restrictive terms and conditions against coverage provided previously. Risk differentiation from clients appeared not to be a driving factor in 2021, with a greater internal focus remaining front and centre for insurers. Pleasingly, in the second half of 2021, insurer management began to emphasise that the construction insurance market was “open for business” as opposed to the focus on rate increase and reduced scope of coverage.

For a more detailed analysis of the CW market, please download the full report below.

More in-depth coverage

Download the report below for more in-depth coverage of the above areas, plus an expert look at:

  • Global coverage and underwriting trends and how they are reflected in local markets 
  • Construction liability/casualty market sentiment in 2021
  • The impact of Environmental, Social and Governance (ESG) matters on capacity concerns
  • Key coverage and underwriting trends observed in the construction liability market 
  • The outlook from here and how to navigate your risk transfer successfully in 2022 

REPORT

Construction

2021 Pacific Insurance Market Recap 

Download Report

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Our Experts

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Maarten van Haaps

Head of Construction, Pacific

Contact

LCPA 22/087