The construction insurance market experienced notable shifts in 2024, influenced by new capacity entering the sector and evolving competitive dynamics, according to a construction sector report by specialist re/insurance broker Miller.
The firm’s analysis of construction lines, professional indemnity, directors’ and officers’ liability, and real estate highlighted changing rates, insurer appetite and evolving regulatory influences.
Miller reported that construction lines saw softening rates as new capacity entered the market over the past 18 months. This trend, particularly evident in project business, was driven by insurers pursuing growth targets, while established insurers faced pressure to maintain market share.
According to the report from Miller, under typical conditions, this would lead to more rapid rate softening; however, varied underwriting performance across the sector may slow the process. Market appetite for construction risks remains steady, with insurers considering a wide range of projects and offering coverage solutions aligned with client needs.
Miller also noted that the professional indemnity market for construction saw increased insurer capacity and appetite throughout 2024, creating competitive pressure that contributed to a gradual decline in rates.
A report from Industry Growth Insights noted that the global construction insurance market was valued at approximately US$8 billion in 2023 and is projected to reach US$12 billion by 2032, indicating a compound annual growth rate (CAGR) of around 4%. This growth is attributed to the increasing demand for construction projects and the necessity for risk management within these ventures.
Regulatory changes, including those stemming from the Building Safety Act 2022, influenced insurers’ risk assessments. The act’s focus on the expanded principal designer role and extended limitation periods under the Defective Premises Act were identified as key factors shaping underwriting decisions.
Miller highlighted those insurers placed increased scrutiny on firms’ risk management practices, particularly considering high-profile contractor insolvencies from 2023.
These insolvencies, combined with broader macroeconomic pressures, kept financial stability at the forefront of underwriting considerations. In addition, insurers showed heightened interest in the adoption of emerging technologies, including artificial intelligence, which is being integrated into project design, risk assessment and operational processes.
Miller reported that while these innovations could enhance efficiency, they also introduced new exposures requiring firms to demonstrate strong governance and risk management frameworks.
Directors’ and officers’ liability (D&O) coverage continued to experience softening market conditions in 2024, marking the third consecutive year of declining average rates, according to Miller. The firm reported rate reductions ranging from 10% to 20%, adding competitive pressure on insurers to meet growth targets for 2025.
According to Miller, excess supply relative to demand, combined with an increasingly challenging claims environment, contributed to ongoing rate declines.
Miller noted that deteriorating macroeconomic conditions and rising insolvencies within the construction sector further complicated the D&O outlook. Regulatory authorities have also introduced stricter requirements, adding further uncertainty to the market. While some expect the D&O market to stabilize by the fourth quarter of 2025, Miller stated that such predictions remain speculative at this stage.
In the real estate insurance sector, Miller observed that the hard market conditions seen in prior years began to ease at the end of 2023. The early months of 2024 saw increased competition, additional capacity and favorable reinsurance renewals, contributing to lower pricing and less stringent terms and conditions.
According to Miller, this environment led to premium discounts of up to 25%, with competitive pricing expected to persist through 2025. However, Miller’s report cautioned that the outlook for 2026 and beyond remains uncertain due to recent property losses in North America, which could influence future market conditions.
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