text: All material subject to strictly enforced copyright laws. © 2021 Insurance Insider is part of Euromoney Institutional Investor PLC.
  Accessibility | Terms & Conditions | Privacy Policy | Modern Slavery Act | Cookies | Subscription Terms & Conditions
  US construction market adjusts to change in appetite
  Laura Sanicola
  26 February 2019
  Twitter
  LinkedIn
  Email
  Show more sharing options
  Share
  Close extra sharing options
  Twitter
  LinkedIn
  Email
  Copy Link URLCopied!
  Print
  US construction insurers are pushing for rate increases of between 5 and 10 percent for even loss-free programmes at renewal as the appetite of two of the largest players in the market shifts.
  According to sources, underwriters are pushing for a 5-10 percent rate increases on vanilla renewals. However, brokers are pushing back, looking to limit rate rises where possible.
  Impacting renewals is a change in the appetite from two of the most significant construction insurers in the US: AIG and Zurich North America.
  As of 1 March, AIG offshoot Lexington will concentrate on the excess and surplus (E&S) lines market, with its core property and casualty offerings available almost exclusively through wholesale brokers.
  Construction is among the specialty retail classes that will move from the admitted retail arm back to Lexington as the E&S player rationalises its distribution lines to refocus itself toward the wholesale channel and re-underwrites its portfolio.
  The process saw the departure of AIG’s head of construction Tom Grandmaison, who has since resurfaced at Aon.
  Meanwhile, Zurich North America has made a series of management changes to its construction business as part of a renewed focus on construction property risk and the middle market segment.
  These changes in the dynamic of the US construction insurance market come as its counterpart in the UK faces a significant capacity cull, driven in part by large property losses. Indeed, UK construction programmes are facing rate rises of between 30 percent and 100 percent, this publication has been told.
  Beazley, Talbot and CNA Hardy have all put their construction and engineering books into run-off since October last year.
  While the London market has been hit with construction insurance claims from the Ituango Dam collapse, the Icthys liquefied natural gas project and, to a lesser extent, the Glasgow School of Art blaze, these losses have not had much of an impact on the US sector.
  However, some brokers fear the London market’s capacity retrenchment will make it more difficult to complete complex placements on which it would ordinarily have been involved.
  Market sources speculated that years of underpricing programmes has led to losses that have now outrun premiums.
  The New York construction space remains a sore spot for carriers, with insurance brokers citing the Scaffolding Law, which “imposes absolute liability upon owners and general contractors, regardless of the comparative fault of the plaintiff”, as a report from Willis Towers Watson noted in 2017.
  As a result, liability insurance prices for construction projects in New York are significantly more expensive when compared with other regions in the US.
  Some brokers are calling on reinsurers to step up to the plate and help fulfill capacity demands for hard-to-complete construction programmes, with companies such as Gen Re, Swiss Re and Munich Re all understood to now be playing a greater role in the segment.
  Tags
  NewsAIGRatesFebruary 2019/4
  Laura Sanicola
  Last updated on 16 March 2021
  Twitter
  LinkedIn
  Email
  Show more sharing options
  Share
  Close extra sharing options
  Twitter
  LinkedIn
  Email
  Copy Link URLCopied!
  Print
  Most Recent
  Lloyd’s launches consultation on core data record
  30 November 2021
  PwC UK pegs Storm Arwen loss at up to £300mn
  30 November 2021
  Bolttech brings in AIG’s O’Malley as group CFO
  30 November 2021
  Amwins Global Risks appoints Graham as casualty division director
  30 November 2021
  Scor joins act4nature alliance to boost commitment to ecosystems
  30 November 2021
  Willis takes Marsh’s Monaghan to lead GB transportation
  30 November 2021
  Convex obtains reciprocal jurisdiction insurer status in US
  30 November 2021
  The Week in 90 Seconds
  Our free weekly newsletter delivered to your inbox every Friday
  Register now
  About Us
  Contact Us
  Advertise
  Talent
  The Team
  Slipcase
  All material subject to strictly enforced copyright laws. © 2021 Insurance Insider is part of Euromoney Institutional Investor PLC.
  Accessibility | Terms & Conditions | Privacy Policy | Modern Slavery Act | Cookies | Subscription Terms & Conditions