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Survey Report

Insurance Marketplace Realities 2022 – Construction

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November 15, 2021

While rates are not expected to decrease any time soon, barring any unforeseen circumstances, the worst of the hard market is behind us.

Rate predictions

Rate predictions: Construction
  Trend Range
General liability Increase (Purple triangle pointing up) +5% to +15%
Auto liability and physical damage Increase (Purple triangle pointing up) +5% to +15%
Workers compensation Neutral increase (yellow line, purple triangle pointing up) Flat to +5%
Umbrella (lead) Increase (Purple triangle pointing up) +15% to +25%
Excess Increase (Purple triangle pointing up) +25% to +50% or more (depending on operations, geography, risk profile)
Project-specific builders risk Increase (Purple triangle pointing up) +5% to +15%
Master builders risk/contractors block programs (renewable business) Increase (Purple triangle pointing up) +10% to +20%
Professional liability Neutral increase (yellow line, purple triangle pointing up) Flat to +10%
Professional liability with losses Increase (Purple triangle pointing up) +10% or more
Contractors pollution liability Neutral increase (yellow line, purple triangle pointing up) Flat to +10%
Project-specific/controlled insurance programs Increase (Purple triangle pointing up) +5% to +15%; +10% to +40% for excess
Subcontractor default insurance Increase (Purple triangle pointing up) +5% to +10%

Key takeaway

After almost two years of the hardest market cycle in decades, the overall market appears to have corrected itself and the rate of price increases is decelerating. While rates are not expected to decrease any time soon, barring any unforeseen circumstances, the worst of the hard market is behind us.

In the second half of 2020 and through the first half of 2021, additional capital came into the overall insurance market. While only a limited amount of this capital will be allocated to construction risks, it may be a harbinger of a changing (improving) market.

  • While we do expect prices to continue to rise across most North American geographies, it should be noted that rate predictions are national averages and are not predictive of an individual program renewal or the insurance cost attributable to a specific project.
  • Many factors, including operational exposures, historical loss experience, risk management protocols implemented by the contractor, geography and historical pricing can significantly impact renewals or individual project pricing.

The passage of the infrastructure bill could have dramatic impact not only on the construction industry but on the insurance industry in general.

  • Infrastructure work, the construction of roads, bridges, etc., is generally considered higher hazard construction. With increased activity, carriers may see an uptick in losses, which would likely result in additional pricing pressure.
  • The Insurance Institute for Highway Safety (IIHS) and the Highway Loss Data Institute (HLDI) have lobbied successfully for several initiatives in the bill:
    • Mandates for automatic emergency braking in all passenger cars and large trucks, potentially preventing nearly 50% of rear end collisions
    • Improvements in truck underride guards
    • Updates to headlight regulations within two years to allow for adaptive driving beams
    • Research into driver alcohol detection system for safety (DADSS)
  • GlobalData forecasts coupled with expected spend from the infrastructure bill would boost the infrastructure construction sector to an average of 5.3% annual growth between 2021 and 2025, up from a previous forecast of 1.5%, and would lift the overall industry to annual growth over the same period of 3.3%, up from 2.2%

Based on data compiled by ConstructConnect that looks ahead through 2025, residential construction will be by far the largest growth segment with $1.8 trillion in new starts followed by infrastructure/engineering with $1.0 trillion. Construction spending is expected to increase outside of the geographies where it is typically concentrated.

  • Presently one in three Americans lives in New York, Florida, Texas or California, but none of these states are predicted to be in the top 10 for growth. Perhaps as a result of COVID, Americans are fleeing densely populated areas and turning toward states like Wyoming (first), North Carolina (second) and Montana (third).
  • There is similar movement within states, according to 2020 data from the Home Building Geography Index (HBGI).
    • Outlying counties of smaller metro areas grew 20.7%
    • Small metro core areas, 15.7%
    • Large metro suburbs, 15.1%
    • Large metro core areas, only 9.1%
  • This trend holds both promise and inherent challenges as both the residential and infrastructure marketplaces are plagued by a shortage of carriers and among those carriers many are diminishing capacity, leading to extreme pricing increases. To exacerbate matters, these growth areas are also facing supply chain disruptions, labor shortages and escalating material costs.

The adage “necessity is the mother of invention” may be appropriate here: insurance professionals need to seek out ways to distinguish risks from peer groups.

  • Review the content of websites and social media posts. Underwriters will often review all available information on a particular risk and will assume that any information on a contractor’s website is 100% accurate — though often that content is aspirational. Remove any confusing or misleading information that could give an underwriter a reason to decline a submission.
  • Proactively present full, detailed explanations of older claims that remain open. Why are they open? What is the strategy for closing them? Without accurate and detailed loss information, underwriters will take a conservative stance and assume the worst.
  • In addition to explaining large losses, include commentary on lessons learned. Losses happen to all contractors, but specifying the improvements implemented in safety or QA/QC protocols will illustrate to the underwriting community a strong desire to improve your overall risk profile.
  • Keep employee handbooks, safety, QA & QC manuals current.
  • Lean in on loss analytics, telematics and safety technology (AEB).
  • Face-to-face carrier meetings are best, but a virtual meeting is better than no meeting. It’s harder to say no face to face. Engage senior leadership of your firm, president, owner, CFO, etc., in these meetings; this significantly increases the credibility of the discussions.
  • Start the renewal process as early as possible and allow ample time for setbacks, additional information requests and, often, mandatory risk engineering reviews.

General liability (GL)

While general liability rates in the construction industry continue to moderately climb, some classes of business have recently begun to experience a flattening of increases on recent renewals.  In some circumstances, driven by operations, risk profile, geography and competition, rate decreases are being obtained.

  • The global market for modular and prefabricated construction will almost double by 2027 to $173 billion. This presents unique product liability risks for contractors, in addition to the completed operations risks traditionally observed on projects. Modular elements may also be excluded from traditional wrap-up programs, leaving the exposure to be addressed by contractors’ GL programs.
    • Contractors should document all modular and prefabricated work, including a breakout in values for a project, and keep their brokers apprised of these operations to ensure proper coverage is in place.
  • The federal American Rescue Plan, along with many state governments, is providing aid to schools to improve indoor air quality. This includes repairing windows and doors and repairing/replacing HVAC systems. These grants will increase the demand for HVAC and repair work.
    • Hospitals and elderly care facilities are also continuing to evaluate the need for new ventilation as well as adding or retrofitting existing spaces with COVID in mind.
  • Risks with challenging exposures, such as wildfire, street and road construction, and residential, as well as insureds with historically adverse loss experience, will continue to suffer steep rate increases.
  • Primary net lines are getting smaller, and with more reliance on reinsurance, pricing is often determined outside of the primary underwriting discussion. On tougher classes of business this might require contractors to take on higher deductibles or utilize a corridor deductible to achieve best results. When considering significant structural program changes, use all available analytical tools to assure the development of an optimal program.
  • Additional underwriting information and longer lead times are being requested more frequently than in years past, particularly when submitting to potential new carriers. Clean submission data and proper risk differentiation will lead to fewer follow-up questions and quicker turnaround times — and potentially better marketplace outcomes.
  • Analytical tools are becoming increasingly vital in determining strategy and support in negotiating positions.
  • Proactive monitoring of revenue and payroll forecasts that may be fluctuating due to economic and COVID-19 recovery is important to ensure premiums are appropriately calculated at renewal. This will help alleviate year-end policy audit challenges.
  • As carriers add additional capacity, the marketplace for best-in-class risks has become more competitive.
  • The ease of virtual meetings allows for multiple stakeholders, such as the owner, president, CFO, etc., to positively engage with carrier partners. The likelihood of obtaining competitive terms with new carriers increases with a deeper understanding of the insured and its business operations.
  • Despite new capacity entering the market, incumbent relationships in many cases remain the most viable option. Recently, incumbents have been more willing to compete to maintain accounts. However, when potentially facing a challenging renewal, beginning the dialogue early in the process helps solidify partnerships between the carrier and insured.
  • Requests for risk engineering surveys are becoming more frequent due to continued underwriting scrutiny and the increasing ease of holding these meeting in virtual settings. Insureds should coordinate with their brokers to assure proper preparation.

Auto liability

Auto rates continue to rise, particularly for insureds with large or heavy fleets. Large deductibles may be utilized to obtain better terms and limit rate increases. Jurisdictions (e.g., Cook County, IL, Southern California, Florida) can also impact pricing.

  • Recent automobile liability renewals have experienced an average rate lift of +9.2%. While Q2 2021 was the second consecutive quarter that yielded an average under double digits, it marked the 20th consecutive quarter of rate upturn (WTW’s State of Casualty Marketplace, available through the WTW Casualty Practice).
  • Fewer drivers on the road during the pandemic led to unprecedented decreases in commercial auto claim frequency. Statutory filings show a 26% decline in reported liability claims in 2020, according to Fitch Ratings.
    • The Fitch Ratings report estimates the 2020 auto liability combined ratio to be 101.6, nearly 8% better than 2019. The commercial auto insurance segment posted its best underwriting result in a decade in 2020, as a result of continued rate increases and a large drop in driving due to the coronavirus pandemic. However, with miles driven approaching pre-pandemic levels, it is unknown whether the improved combined ratio will be reflected in auto liability rates going forward.
  • Eight-figure verdicts are becoming more common, attributable to improper driver training and selection, cost of traumatic brain injury treatment, third-party litigation financing and punitive damages relating to distracted driving cases.
    • In August 2021, a $1 billion verdict was handed down to two commercial trucking companies found liable in a 2017 fatal crash, including $900 million in punitive damages. Both companies were found to be negligent due to their lack of background checks on the drivers and for not enforcing safety measures; it was determined that the drivers were distracted, and one had multiple driving infractions and lacked a commercial license.
    • Such nuclear verdicts cannot be ignored when anticipating pricing for auto liability.
  • Auto physical damage rates remain on the rise due to the increased value in vehicles, as insureds invest in updating their fleets. Technological advancements make vehicles more costly to replace in the event of a collision.
  • Carriers are pushing for higher deductibles on both light and heavy autos.
  • Higher cost vehicles typically face higher deductible requirements. Autos with price tags over $50,000 may be subject to deductibles as high as $5,000 regardless of their weight class.
  • Fleet size is a significant component of underwriting evaluation, attachment point and pricing.
  • Insurance buyers with moderate to large schedules (excess of 500 units) may be forced to increase primary limits to $5 million combined single limit (CSL) or obtain an auto liability buffer to satisfy umbrella attachment requirements.
  • Vehicle usage data (miles driven, location, etc.) is becoming required submission information.
  • Buyers must be proactive regarding fleet safety. Those with robust driver safety programs are generally able to obtain more competitive pricing.
  • Portfolio pricing is often considered by underwriters. Poor loss experience on general liability and workers compensation can make it more challenging for buyers to achieve accommodations on challenging auto exposures.

Workers compensation

Overall, the workers compensation (WC) market remains stable, as forecasted payroll exposures are beginning to rebound from the declines brought on by the pandemic, creating economies of scale.

  • Workers compensation continues to act as an anchor for the rest of the primary casualty placement, offering opportunities for buyers to offset rate increases on other lines.
  • WC payrolls have remained consistent throughout the pandemic, as construction is generally considered an essential industry, allowing for work to continue. To date, impactful COVID-related claims have not materialized.
  • Mental health issues are still prevalent in the construction industry and are linked to an increase in the amount of time it takes to heal from physical ailments.
    • Telehealth can increase usage of helpful mental health services, thanks to ease of access, reduced stigma and lower costs. Psychotherapy is the top telehealth claim line nationally. Use of telehealth for mental health conditions is continuing to increase, making up 61.3% of claim lines nationally in June 2021 (FAIR Health).
    • Resources such as text therapy are also becoming more commonplace. Text therapy helps combat mental health concerns without the help (or cost) of a doctor or therapist, offering a 70% improvement in depression and 59% in anxiety (Ginger).
    • 75% of employees require support that fosters mental wellness; the availability of this support helps prevent increasing severity.
  • The ongoing labor shortage in the construction industry presents challenges in acquiring and retaining skilled labor. With an influx of infrastructure spending and construction work in the pipeline, construction firms may face a conflict of interest between taking appropriate time to properly train employees and completing projects on time. These issues could result in more claim incidents.
  • Increased use of new, expensive medical technology can inflate loss costs by up to 50% and are a key driver in mega claims (WTW’s State of Casualty Marketplace, available through the WTW Casualty Practice).
  • Markets continue to demonstrate a broad appetite for WC construction opportunities.
  • The guaranteed cost monoline WC market is extremely limited. More carriers are willing to entertain the risk when paired with other primary casualty lines.
  • Some geographies continue to present challenges for carriers, e.g., California, Florida and New Jersey. Labor laws routinely make obtaining coverage especially difficult in New York.
  • Many insureds have started to look at increasing deductibles or retentions to offset rate increases. This should only be done after analyzing expected losses and retentions in each deductible scenario. Aggregate stop losses and clash deductibles are a strategic way to limit an insured’s out-of-pocket exposure.
  • Investments in risk control and safety strategies may help reduce insurance rates on certain construction projects. For example, sensors on equipment and personnel at jobsites that are shown to combat loss frequency and severity will often lead to reductions in quoted premium.

Umbrella/excess liability

Carriers continue to leverage lead umbrella capacity to secure positions on primary programs. More carriers are leveraging their umbrella to protect their primary counterparts from competition.

  • The market for unsupported lead umbrella capacity remains scarce, compelling contractors to market their primary programs in order to secure competitive umbrella pricing and terms.
  • Attachment points and minimum premiums have increased, leaving contractors with no choice but to consider non-admitted markets lower in their excess towers.
    • Non-admitted markets often have more restrictive coverage than the admitted marketplace, such as anti-stacking limitations, residential and condo conversion exclusions.
  • Many excess underwriters are becoming increasingly focused on the relative pricing of their quoted layer rather than writing to the individual risk itself. Underwriting attention is given to the price-per- million of each layer in relation to those layers below and sometimes even higher up in the tower.
  • Quota share layers are becoming more commonly explored on certain classes of business, as carriers look to reduce their total limit exposure. Pricing is typically higher in these instances and challenges arise in finding multiple carriers that will agree on pricing and terms.
  • Capacity remains limited in lower excess positions, despite recent upward rating trends.
  • Terms and conditions once easily obtained, such as excess of wrap and growth margins, have become increasingly challenging and/or expensive to obtain. For excess wrap, the contractor must be able to provide comprehensive data pertaining to historical involvement in wrap-ups to attain even a modicum of coverage. Further, anti-stacking and contractor limitations have become exceedingly difficult to remove. Primary and excess carriers are also limiting overall capacity extended to an individual buyer by capping per-project aggregate limits; some direct umbrella/excess markets are now unwilling to provide per-project aggregates at all.

Controlled insurance programs (CIPs)

Due to social inflation, COVID-19 project delays, drastic cost fluctuations of materials and the continuing trend of nuclear verdicts, CIP pricing is expected to steadily increase through 2022.

Data is the most important factor in pursuing carrier support for CIPs.

  • Due to market conditions, submission flow has substantially increased, allowing carriers to be selective in the risks they will consider.
  • Data and analytics are key to demonstrating safety and loss control measures.
  • Available terms and conditions are dependent upon the quality of underwriting information.

Capacity continues to be a challenge.

  • One primary general liability carrier recently exited the project market completely.
  • Unsupported leads are offered only by a handful of carriers, limiting the primary options for project risks.
  • Most excess carriers are limited in deployment to less than $25 million. Creativity is often needed to secure large liability towers, including quota-sharing layers that may have previously been supported stand-alone.
  • Capacity constraints and varying carrier minimums are driving higher excess pricing.

Reinsurance treaty negotiations are a driving factor on terms and conditions, rate and needed extensions.

  • Communicable disease exclusions have become part of many reinsurance treaties, reducing the ability of buyers to negotiate their removal.
  • Due to unforeseen circumstances, e.g., COVID-19 and resulting schedule impacts, project run-off can be complicated by the need for extensions. Treaties can contain restrictive language that limits project term and limit extensions.
  • Extension premiums are being heavily underwritten to appropriately price for the additional time on risk.

Rolling programs are becoming more restrictive.

  • It is less common to see the general aggregate reinstate on an annual basis. Reinstatements may be accepted once or twice, depending on total project length.
  • Per-project general aggregates and per-project products-completed operations aggregates are being capped so carriers can control their total amount of limit deployed.
  • New York continues to be a challenge. General liability may only be offered on a very large or matching deductible basis.

Residential and wood frame projects continue to be difficult placements, with a limited marketplace.

  • Single family build-to-rent is a rising trend. The potential for such projects to quickly flip to for-sale status, potentially increasing risk, has created a tight marketplace.
  • Difficult jurisdictions for residential, such as California and Florida, are seeing larger rate increases, as loss activity for residential continues to be unfavorable.

New York controlled insurance programs (CIPs)

The liability market continues to trend drastically upward with no signs of slowing down.

  • Historically, projects in the five boroughs of New York City faced extra underwriting consideration. Now, however, most of the marketplace underwrites New York labor law as a statewide risk, affecting any project in the state. 
  • Under a CIP, an enrolled contractor that sustains an injury resulting from a fall or from a falling object typically results in a labor law general liability claim in addition to the workers compensation claim.
    • Due to inflation, nuclear verdicts and insurance payouts trending upward on labor law claims, payouts are not expected to slow down or level out any time soon.
  • New York State courts tend to lean as broadly as possible to favor injured employees.
  • Alternative dispute resolution (ADR) has been employed on a major upstate project, resulting in reductions in the frequency and severity of labor law claims. However, such programs require long lead times to initiate and implement properly.

Builders risk

Builders risk continues to be a two-tiered market. Steady capacity has alleviated major rate hikes on new ground-up projects for superior construction classes. Prototypical technologies, unique construction methods and extreme natural catastrophe exposed projects continue to face hesitancy in the marketplace and/or more restrictive terms and conditions.

  • Communicable disease exclusions have become commonplace on all new projects, extensions, and renewals.
  • Gathering considerable and accurate underwriting information is a prerequisite for obtaining quotes due to the increased scrutiny on placements by underwriters. Highlighting best-in-class supply chain efficiencies and material procurement protocols will help.
    • Higher water damage deductibles can be expected, especially on high-rise, residential and wood frame projects. Water mitigation plans are increasingly required in these sectors, among others. To assure contract certainty and potentially avoid non-compliance with construction contract obligations, clients should thoroughly review all contractual requirements pertaining to acceptable water damage deductible levels prior to executing contracts.
  • Technical underwriting continues to drive rates up on highly cat-exposed MBRs, as natural catastrophe events attract more scrutiny across the industry.
  • Carriers are reluctant to offer coverage extensions such as LEG 3 and damage to existing property on certain projects. If and when such extensions are offered, higher rates and/or deductibles usually apply. 

Extensions remain difficult to obtain on all projects, given the unprecedented number of pandemic-related extensions needed.

  • Increased rates and deductibles, in addition to possible restrictions in coverage, can be anticipated on all extensions. Projects with losses, heavy cat-exposed locations or those that are backed by reinsurance support can expect more severe restrictions and corrections in rate and overall terms.
  • Carriers are continuing to scrutinize underwriting data and seek additional approvals, which is causing overall delays in quote turnaround time.
  • Engage with your broker early and often. If an extension is anticipated, provide as much up-to-date and accurate information as possible about the current status of the project and the reasons for the extension.
    • Proactively seeking lengthy extensions in some cases can be beneficial. However, we are seeing a shift in the marketplace where carriers prefer providing extension terms closer to expiration.

The wood frame market continues to be challenging, as several large recent fires will put further pressure on an already tough class of business.

  • With lumber prices stabilizing, overall construction material costs will decrease, which should yield a positive correlation in wood frame project premiums.
  • Provide adequate lead time for wood frame submissions — turnaround time could be weeks to months depending on project size and complexity.
  • Although there is some new capacity, overall market capacity has declined because several carriers have either decreased their appetite or exited the space entirely.
  • Site security has become commonplace for most wood frame construction. Risk managers and contractors should consider site security as part of the all-in construction cost and not an additional item. Electronic service monitoring can be costly depending on the scope of work and length of the project, so engaging vendors early is advised.
  • As with site security, we are starting to see a push for water detection services on sizeable wood frame projects.
  • Due to an increase in crime scores, civil unrest, riots, arson and looting, certain geographies have proven challenging to underwrite. Buyers should anticipate higher rates and even more attention to security capabilities in these locations.
  • Due to the proliferation of wildfires in certain areas of the U.S., specific wildfire deductibles or restrictions may appear on new placements.

Professional liability

The construction professional liability market remains relatively competitive, although increased underwriting scrutiny continues, with carriers careful about capacity deployment and retention levels.

  • Adequate capacity and continued competition are keeping rate increases manageable compared to other P&C insurance lines. However, we are continuing to see upward pressure on rates and retentions, especially for project-specific capacity.
  • Total U.S. capacity continues to be in excess of $300 million, with additional capacity available through London, Bermuda and other international markets.
  • While there is still significant total capacity in the market, carriers are generally restricting capacity for any one risk.
  • Protective indemnity and rectification coverages are now included in standard forms offered by leading carriers, but terms and limits can vary considerably, and we are seeing added underwriting scrutiny for these enhancements.
    • Some underwriting authority is being removed from the field, leading to a longer underwriting process.
    • Carriers continue to add COVID-19/communicable disease exclusions, more commonly for programs with combined contractors professional and pollution liability forms. Wording varies greatly from market to market, with some limiting the exclusion specifically to COVID-19, some including broad viral exclusions and some limiting the exclusion to pollution coverage only.
  • Project-specific placement solutions vary based on the controlling party (contractor/engineer/owner) procuring the insurance; regardless, we are seeing increased underwriting scrutiny, motivating brokers and underwriters to find innovative solutions for evolving contract structures.
    • Market capacity for architects and engineers (AE) project-specific solutions has contracted, especially for large project-specific placements.
    • Many carriers in the contractor’s professional liability market are reserving project-specific capacity for existing clients.
    • Large design-build infrastructure projects continue to produce adverse loss experience for the AE market, creating risk allocation challenges for contractors, particularly when employing design-build contract delivery.
    • Buyers can expect underwriting scrutiny of coverage enhancements, such as rectification/mitigation. Underwriters are also conducting detailed contract reviews related to insurance requirements, limitations of liability and contractor assumption of design responsibilities.
  • There is continued interest in owner-procured professional indemnity policies for further protection on project risk.
  • Increasing project values creates a corresponding rise in professional liability risk, yet many contractors and design professionals do not carry limits that adequately address these larger exposures.
  • Traditional project-specific professional liability policies covering all design risk on a project can still be obtained, but many buyers prefer the cost efficiency of professional liability products that offer a protective indemnity coverage approach.
  • Shrinking capacity for architects and engineers and continuing pressure for contractual limitations of liability are driving increased demand for owner-procured protective indemnity (OPPI) for projects.
  • Protective coverage procured in rolling programs by project owners continues to attract interest.

Contractors pollution liability

A continued increase in construction activities is expected well into 2022, as is the demand for contractors pollution liability (CPL) coverage.  Recent carrier entries as well as contraction in the site pollution market makes CPL coverage a highly competitive product line, although slight rate increases are to be expected.

  • The following exposures continue to fuel the need for practice- and project-specific CPL coverage: pollution exposures during work and after completion, indoor air quality, Legionella, mold and water-related issues, application of chemicals, installation of building products, excessive siltation, emergency remediation expenses, contractor-owned locations, beyond-the-boundaries scenarios, and transportation and disposal of construction debris. 
  • The largest expected rate increases will be associated with monoline habitational, hotel, hospitality and hospital risks — sectors that continue to experience the highest claims activity.
  • Mid-term modifications (i.e., policy term) requests to multiyear project policies written before the pandemic are often granted only with accompanying COVID-19 and communicable disease exclusions. Similar exclusions are to be expected on new CPL placements, although coverage for mold and Legionella remains available. Each carrier’s form needs to be evaluated for potential coverage.
  • Site pollution coverage that may accompany a pollution wrap-up program will require special attention, as this product line continues to experience reductions in capacity and policy terms, as well as appetite with respect to emerging exposures and contaminants of concern, such as per- and polyfluoroalkyl substances (PFAS).
  • Claim activity related to redevelopment of brownfield properties continues — although carriers try to limit exposure by adding exclusions associated with historic fill, dewatering and voluntary site investigations. In addition, we are seeing increased claim activity related to stormwater run-off from construction sites. We are seeing claims brought by project owners, citizen action groups and regulatory agencies.

Subcontractor default insurance (SDI)

SDI carriers continue to add capacity in anticipation of continued growth in demand into 2022 and beyond. As delayed projects get back on line, we are seeing steady increases in backlog for 2022. Access to qualified labor will be a key challenge in getting this work done. Owners, developers and general contractors continue to leverage the comprehensive coverage SDI provides to ensure operations and projects are protected against subcontractor default.

  • The SDI marketplace now has seven carriers, including five that we consider actively engaged in the product line. Four of those five can offer single limits of $50 million or greater per loss.
  • Talent is shifting in the SDI sector. Leaders have changed firms, and there is a new market which is set to open in early 2022 led by ex-leaders of a key SDI player.
  • With the introduction of new capacity and choice, buyers should review current policy terms, conditions and pricing.
  • Underwriting in the current environment will continue to present challenges. SDI carriers are often skeptical of contractors who are altogether new to SDI, and virtual underwriting meetings may not be sufficient to build trust.
  • For the near term, contractors will have to make special efforts to confirm a subcontractor’s financial, operational and safety capabilities. We expect contractors to consider a balance of SDI and subcontractor bonds to get through this period of uncertainty.
  • Despite current uncertainties, the SDI marketplace is robust. Markets are responding responsibly with some adjustments to their program offerings. In addition to the overall increase in market capacity, the recent entrance of a new carrier offering significant limits, without legacy exposure, provides an additional option for both the near and long term.

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast Inc. (in the United States) and Willis Canada, Inc.

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