Insurance industry professionals were in lockstep in defining the current construction insurance market as soft, or at least as experiencing some pressure in rates. Most, though, said they would still characterize the market as healthy–and rationally priced.
John Mentz, executive vice president of construction for Arch Insurance, said the market is soft but fair. He said that contractors' individual experience is driving rates, in addition to the general insurance market cycle.
Mr. Mentz said industry results have been good, there is capital building, and there is more competition. "A big part of [contractors'] insurance costs are workers' comp, and workers' comp results continue to be good and continue to get better."
Todd Rowland, senior vice president of construction specialty products and services at Zurich North America Commercial, said "we're seeing some pressure on pricing," but added that "I don't like to call it 'softening.' Yes, there's pressure on pricing. But it's different depending on which jurisdiction you're in–which state, and what the specific issues of the state are."
He added that the construction industry is not softening at the same rate as the rest of the property-casualty industry. "With construction, things are so risk-sensitive. The folks who will see the most benefit from a rate standpoint are people who have very good experience."
Mr. Rowland added, "It's not a broad softening across all construction contractors because, frankly, some just don't do as good of a job and won't be able to justify the lower rates."
Rick Girden, managing director of the property construction practice at Mercator Risk Services, summed up the market as follows: "Overall, the industry is definitely softening, but it has not hit the historic lows of 2000. In 2000, prices got so low that it took a massive adjustment in 2001 and 2002 to bring it back."
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