The construction-insurance market remains stable, but pricing is mixed depending on the sector, a Marsh market update states.
In its August Construction Market Update, Marsh says the primary casualty market for construction risks is in a "period of transition," with insurers seeking rate increases ranging from 5 to 15 percent.
Marsh says, "In the first quarter of 2012, marketing the account generally was successful in lowering rates compared to the incumbent's offering; however, that stopped being the case in the second quarter. With the competition less aggressive, more incumbents are keeping the business."
Other areas in the construction-insurance market, though, are still seeing strong competition marked by flat or declining rates. Marsh says this is the case for controlled insurance programs, or wrap-ups, which is competitive due to "a U.S. construction economy that remains near a 12-year low, and a resultant lack of major projects."
Project-specific general liability also remains competitive and is seeing enhanced coverages offered in addition to abundant capacity.
Marsh also defined the professional liability and environmental markets for construction risks as competitive. For environmental, Marsh says insurers are seeing an increase in interest for energy-related projects such as shale-gas extraction. For professional liability, Marsh says new entrants are "aggressively pursuing" new business, while incumbent insurers are trying to hold the line rates or achieve slight increases.
Builders Risk is seeing stable capacity, which has generally kept rates flat, Marsh says, although areas with catastrophe exposures are seeing rate increases of between 10 to 20 percent.
Marsh says umbrella and excess capacity is stable, but insurers are looking for moderate rate increases.
Of course, as in most industries, Marsh says the tepid economic recovery remains a major concern for the construction industry. "There has been little growth in employment, and government funding for projects continues to waver," says Marsh.
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