The insurance market for construction firms, architects and engineers appears to be hardening, according to the latest Lockton Market Update.
The monthly analysis from the world’s largest privately held insurance broker found evidence of rising prices, something the sector hasn’t seen in several years.
“The market is clearly firming in chosen segments and geographies, and while most would hesitate to predict a ‘hard’ market, pricing is under pressure,” said Lockton’s Jamie Knoop, Paul Primavera and Jody Wright in the construction report. “Accounts with good loss histories are still able to take advantage of a very competitive insurance market.”
Worker’s compensation markets in construction, especially in California, are more challenged. “For 2012, we expect the construction insurance market to be in transition toward increased rates. However, until the market experiences sustained underwriting losses, material decline in surplus and capacity, and a tightening in the reinsurance market, the market will continue to be stable and available for consumers,” the report explains.
In professional liability for architects and engineers, the largest firms are seeing the most pricing pressure, said Lockton’s Thomas Miller in a statement. “Overall rates in the professional liability sector have begun to strongly trend upward outside of the small- and mid-size sector, and accounts with significant claims are seeing sizeable increases in rate.”
Miller added that project-specific coverage is particularly challenging. ”Project-specific professional liability for architects and engineers remains a product that continues to experience very restrictive terms and conditions along with very strong pricing from the carrier’s perspective.”
Market conditions are forcing the hardening, according to the report.
“Insurers have also been impacted by the anemic interest rate environment and have been unable to offset underwriting losses with investment income,” the report suggests. “Several carriers have publicly stated their need for increased rates, and others are poised to do the same if broader industry support materializes.”
Some commercial P-C sectors ‘transitioning’ toward hardening via IFAwebnews .