Times and economic conditions change and as they do, so does the insurance industry.
With many sectors in the insurance industry seeing more claims and higher losses over the last few years, so too is the construction industry with construction risk insurance premiums slated to increase heading into the New Year.
According to industry experts, It’s a long overdue tightening of the market but one that will likely have more than just a few construction companies seeing a significant rise in their construction insurance premiums.
Construction Insurance - Soft Market Turning Hard
An important topic of discussion at this year’s Construction Risk Management Conference November 10 through 13 was risk insurance and the fact that the soft market of lower rates and more flexible policies is changing to a harder market with less financial wiggle room.
Construction risk insurance agencies overall are predicting a much tighter insurance year in 2020, with premiums expected to rise as much as 4 to 5.5%.
This is a stark contrast to what’s been happening over the past decade, which has seen reductions in premiums up to as much as 2.5%.
Experts recommend that construction companies anticipate the increase and start pricing new jobs accordingly.
Why The Sudden Changes to Construction Risk Insurance?
As a whole, Insurance has experienced extreme losses over the past few years mainly due to the increased incidence of natural disasters and the astronomical costs of recovery.
These losses extend to every sector, touching into the construction industry due to huge losses in property insurance and excess coverage.
As a result, major underwriters are building up to reduce ongoing losses in construction risk insurance with premium increases and being pickier on the coverage offered.
What Does It All Mean for Construction Companies?
A hardening market essentially means that companies should expect higher premiums, possibly higher than they’ve seen in many years as well as also stricter policies.
Underwriters are already becoming more selective of who they choose to insure and for how much.
Claims history is becoming a significant indicator of insurability, with some experts suggesting that companies with even one claim could have difficulty buying a policy.
Company track record will be more important than ever, as will having a positive relationship with a good construction risk insurance agency that’s willing to do as much as possible for a good client.
Start Preparing Now
With significant changes around the corner, industry experts recommend that construction companies begin meeting with their insurance agencies now to address any concerns and start preparing a good, cost-effective policy for the coming year.
They also recommend that businesses consider taking on some additional risk on their own and budgeting for those risks, rather than trying to insure them.
Discuss it all with an agency today so there is a solid plan in place once renewal in 2020 comes around!