Insurance experts have had to be flexible and creative with the construction class since the bottom fell out of the housing market six years ago. From flexible payment options to a “pay-as-you-go” program to expanded forms, insurers did what they could to help this segment get through the tough times. But the construction segment came back in a big way in 2013; and with it came many new coverages and programs.
While experts agree that the market still isn’t what it was before the recession, there is still plenty of optimism, which certainly wasn’t the case a few years ago.
“Generally speaking the construction market is healthy,” said Mary Ann Krautheim, senior vice president and unit manager at Lockton Cos., in Kansas City, Mo.
Experts also say those construction firms that did survive are better risks to insure than they once were, and insurers are now focused on rebuilding their construction books and writing more of the good business. For some, that means investing in its insureds to help those that did survive get back on their feet.
Annemarie Elder, chief underwriting officer for XL’s Inland Marine division, says many contractors have put equipment maintenance on the back burner to save money, so expensive equipment hasn’t been properly serviced for years and may need repairs. The carrier is looking to address this through coverage and onsite inspections.
“Maintenance is expensive and contractors have cut down on their maintenance budget. For some of the larger equipment loss control is going to be critical, so we are going out and looking at the condition equipment is in,” she said.
Insurers were busy in 2013 getting ready for what they expect to be a busy 2014 for this class. Other construction market news that came out of 2013 includes:
- Philadelphia Insurance Cos. unveiled coverage in January of last year for restoration contractors that clean up and restore property following a fire, flood or other damage.
- The Hartford enhanced its Construction Group capabilities in March by bringing together its underwriting, claims management and loss control facilities and adding construction underwriters across the U.S.
- Aspen Insurance formed a specialty marine, energy and construction unit in April focused on property covers for a variety of classes of business in these sectors. It is distributing products in the U.S. primarily through a limited number of retail and wholesale brokers.
- In May, HCC Insurance Holdings launched a Construction Property Risks Division focused on builders risk insurance. The new division is based out of New York and led by Francis P. Tricamo, Sr.
- Travelers launched an enhanced builders risk product in May to aide construction projects of all sizes and types with staying on schedule.
- In June, ACE launched a contractors pollution liability program for new construction and renovations of hospitals, outpatient facilities, clinics, laboratories, and assisted living operations.
- Then in October, ACE USA’s Construction Practice launched catastrophe claims servicing capabilities through its risk management service company ESIS. The new offerings include catastrophe pre planning, catastrophic claims servicing and emergence response for businesses, general contractors and construction managers for both new construction and renovation projects.
- XL Group partnered with the American Contractor’s Insurance Group (ACIG) in November to help construction clients improve the quality of their work, deliver projects on time, and prevent costly mistakes through data and analytics.