Most insurers in the Australian market finished 2021 on a positive note with their remediation strategies returning construction portfolios to positive territory. Their approach in the short to medium term will again focus on wording and coverage, including excess/deductible levels and capacity deployed.
While rates and policy coverage for most clients are likely to stabilise this year, clients with adverse loss histories and projects in perceived high-risk sectors and/or geographical locations are likely to be the exception, with continued upward pressure on premiums.
Our insurance market update, which you can download below, confirms that it remains important for clients to provide insurers with comprehensive and quality information on their businesses and processes.
There are already signs of a moderation in Contract Works premium increases, although some areas of concern remain – particularly mitigation strategies for water damage exposures and the management of logistics issues stemming from global supply chain shortages impacting policy extensions.
Third Party Liability has continued the trend of significant rating increases for most clients, with Worker-to-worker and contractor injury claims the main focus. Also of note are major losses surrounding faulty construction and a hike in claims costs. We believe, however, the rating lifts and worker-to-worker deductibles will be stable throughout 2022.
Challenging conditions for the Design & Construct Professional Indemnity market are ongoing but we do not expect to see the same rate increases, reductions in capacity, focused coverage restrictions and increased retention levels to continue in 2022 at the same pace. There are also signs insurers have more interest in taking excess positions on construction risks which, in the medium term, will lead to greater competition in this space.
