Building excess-capacity towers for today's difficult construction risks requires deep expertise and strong carrier relationships. (oselote/Adobe Stock)

The construction insurance market is experiencing a period of relative stability.

Under the surface, however, construction-insurance brokers face significant challenges securing excess capacity and placing specialized risks, according to a panel of experts who spoke during the recent Burns & Wilcox webinar, “Construction Insurance Outlook — E&S Strategies for a Growing Market.”

While primary general liability coverage remains accessible, the market for excess insurance has become increasingly difficult and fragmented, panelists said. This dynamic, combined with emerging high-hazard risks in niche sectors like swimming pool installation, is forcing agents and brokers to lean heavily on E&S market solutions and deep carrier relationships to build adequate coverage towers for their clients.

“The excess is the tough part,” said Denis Brady, president of the brokerage division at Burns & Wilcox. “It wasn’t too long ago where if you had to build a $50 (or) $100 million-dollar tower, you knew who the players were, what limits they were going to put up, where they wanted to play, and I could make a pretty educated guess as to what they were going to charge … That is all out the window now.”

Regional distinctions

Across the U.S., from Texas to the Midwest and the West Coast, the story is largely the same: Primary and renewal rates are holding steady, but excess capacity is shrinking as carriers reduce the limits they are willing to deploy for a single construction project.

This shift means building a substantial coverage tower for construction-industry clients now requires working with more carriers than in the past, making the process more complex and time-consuming.

“You don’t really see $25 million capacity put up anymore,” said David Gross, a managing director with the Burns & Wilcox Brokerage Division in North Dallas. In the past, “it took two carriers to get to $100M, right? Now that would be five, six, seven carriers to get to $100M.”

This market condition has been the status quo for the past year and is not expected to change in the near future, Brady added.

Swimming pools

As the construction insurance market tightens, certain classes of business with unique risk profiles are increasingly finding their home in the E&S space.

Swimming pool contractors, in particular, present a complex web of exposures that require specialized underwriting.

Amber Carver, vice president and associate managing director at Burns & Wilcox in Salt Lake City, said swimming pool contractor exposures extend beyond typical slip-and-fall claims.

Some common risk associated with this type of construction include:

  • Property damage: A contractors may, for instance, hit a gas line while digging or cause damage to adjacent structures during pool construction.
  • Construction defect: Faulty work that does not meet construction plans is a significant exposure.
  • Environmental issues: Chemical runoff and wastewater create a pollution exposure may require a standalone environmental policy for adequate coverage.

“Without the proper insurance, one single incident could bankrupt a company,” Carver warned, emphasizing the need for robust risk management that includes thorough contract reviews.

A unique and often-excluded risk for this class is “swimming pool pop up,” where hydrostatic pressure from groundwater forces the pool shell to literally pop out of the ground.

“A lot of times, that’s going to be excluded unless it’s addressed on the policy,” Carver said. “There’s a number of companies that will give a buyback for that coverage specifically.”

‘Concrete cancer’

A severe issue that plagued Central Texas in recent years is alkaline silica reaction (ASR), also known as “concrete cancer.” The problem arose from improperly mixed shotcrete, a type of sprayable concrete used in pool construction.

“When you don’t mix the right amount of fly ash in the mixture, the concrete will fail,” Gross said.

The issue affected hundreds of pools in the Austin and San Antonio areas. The financial consequences were devastating for contractors and their insurers.

Relationships are key

In a market defined by complexity and capacity constraints, the panelists agreed that strong relationships between retail agents, brokers and underwriters are more critical than ever.

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