Rates for construction insurance products in Asia increased by at least 5% in the first half of 2020, according to global broking and advisory firm Willis Towers Watson.
In its Global Construction Report Mid-Year Update, Willis Towers Watson revealed that pricing generally rose during the first half of 2020 in key markets such as Singapore and Hong Kong. One of the main drivers of those increases was the continued tightening of underwriting guidelines, as these regional markets align to their global management directives to increase rates and improve underwriting results.
Rates for construction “all risks” and a delay in start-up policies in the region increased by between 5% and 20%. Third party liability and construction plant & equipment rates were up from 5% to 10%, while professional indemnity cover was up 10% to 15%.
Due to COVID-19, capacities and breadth of policy coverage offered by underwriters undergoing increased scrutiny makes a reduction likely in the second half of 2020.
However, there are some exceptions in other markets, such as in Vietnam, Indonesia and Taiwan, where strong appetite still exists for small- to medium-valued domestic projects, and in China, where significant capacities are readily available for local and overseas Chinese-interest projects.
“The markets appear to still be in the transition, and we anticipate the hardening trend and curtailment of projects to persist in the immediate future,” the report said. “This trajectory should start to plateau and stabilise at a ‘new’ equilibrium towards the end of the year as economies re-open gradually across the region.”
