A Construction Marketplace Status Update
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According to a recent Business Insurance article by Judy Greenwald, construction projects have increased significantly in number, but plentiful insurance capacity means companies in this sector are seeing only modest changes in insurance rates. Here are some of my thoughts and comments on the article, as well as additional input on the current insurance marketplace for construction companies.
The competitive landscape for good constructions risks is a key point in the article. And while there’s considerable capacity, that capacity – or willingness to underwrite a risk – is reduced for any construction company deemed as an unprofitable risk (e.g. large claims, high mod, more exposures…etc.). Carriers are looking to price these risks appropriately, or in some cases, not at all.
We’re also seeing continued strict adherence to underwriting standards in historically poor performing lines of coverage, such as workers’ compensation.
Even though there’s been an increase in recent projects, construction defects continue to befuddle the insurance industry as carriers are routinely seeing thousands of claims on a monthly basis for projects prior to 2010. Because of the large number of defect claims, residential construction is an area where we won’t see any softening in the near future – if ever.
Workers’ compensation is being stressed as a new trend continues to play out – medical costs outstripping indemnity costs. Well thought out medical management and disability management programs are becoming a must for construction companies.
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