The construction market continued to present buyers with challenges in 2022, with insurers still taking a cautious approach to underwriting following several years of running at a loss.
On a more positive note, for some insurers 2022 was the first profitable trading year in a number of years. We should however remain cautious around the idea that this will prompt a softening in the market.
The first half of 2022 gave buyers of construction professional indemnity (PI) insurance cause for optimism.
Early signs of stabilisation and a return of underwriting appetite presented welcome relief to the prior three to four years of relative doom and gloom. The balance of the year saw continued improvement with further stabilisation of rates and increased appetite from existing and new insurers. This was driven in part by continued pressure for portfolio growth into a sector of the market that is now positioned to provide better returns to insurers and their investors.
2022 marked the beginning of a change within the Directors and Officers (D&O) insurance market.
With most construction companies hit by increasing premiums throughout prior years, it will have come as a relief to see premium decreases beginning to appear. The introduction of numerous new insurers is largely to thank, with competitive tension returning to the market, forcing insurers to either drop their rates or risk losing the business. The budgetary pressures felt by insurers created a snowball effect in the final months of last year, giving buyers the opportunity to improve terms where earlier improvements might have been impossible.
Rising inflation, supply chain instability, project backlogs and tightened cash flows, reduced profit margins and insolvencies - the reality the construction sector is currently facing.
However, in times of economic uncertainty we see an increased demand for surety as Employers and Beneficiaries look for security under their contracts and mitigate contractor uncertainty. As already mentioned in this report, it is expected that the UK construction sector could face as many as up to 6,000 insolvencies in 2023.
Despite the uncertainty and challenges of the sector, the surety market is continuing to support contractors, but there are some considerations and limitations to note.
Founded in 1902, Miller has grown to become one of the world’s leading specialty insurance brokers.
Innovative and forward thinking, we fervently focus on our clients’ needs and delivering risk transfer solutions that lead the market. We provide specialist risk advice and insurance solutions to all parts of the construction industry.
Representing owners, contractors, developers, consultants and suppliers, we deliver intelligent and tailored solutions that match your specific risks. Our industry expertise, client-first ethos and collaborative structure sets us apart from our peer group.
Our service proposition can be summarised by the following:
Founded in 1902, Miller has grown to become one of the world’s leading specialty insurance brokers.
Innovative and forward thinking, we fervently focus on our clients’ needs and delivering risk transfer solutions that lead the market. We provide specialist risk advice and insurance solutions to all parts of the construction industry.
Representing owners, contractors, developers, consultants and suppliers, we deliver intelligent and tailored solutions that match your specific risks. Our industry expertise, client-first ethos and collaborative structure sets us apart from our peer group.
Our service proposition can be summarised by the following:
