Insurance Journal examined industries experiencing changes and expansions during the past year. Here are the top 10 market sectors that just might deliver hot opportunities for agents and brokers in the property/casualty insurance industry in 2013.

1. Construction Several market indicators have shown a recovery in the housing market. Slow but steady growth continued throughout 2012 despite challenges in home lending.

"Consistent, positive reports on housing starts, permits, prices, new-home sales and builder confidence in recent months provide further confirmation that a gradual but steady housing recovery is underway across much of the nation," according to David Crowe, chief economist for the National Association of Home Builders (NAHB).

Multifamily construction projects continued to be the bright light in the construction market. The multifamily sector has led the way in the recovery of the overall housing market and now stands at about 70 percent of the way back to a sustainable level, according to the NAHB.

"Last year was a banner year for the multifamily market, and our baseline forecast calls for further steady growth in the rate of multifamily production," said Crowe. The NAHB is forecasting construction of 299,000 new multifamily residences in 2013.

Single-family housing is also making a comeback although at a much slower rate. In January, single-family housing starts listed at a 0.8 percent gain to 613,000 units, the strongest pace of single-family housing production since July 2008.

Regionally, combined single- and multifamily housing production gained 4.1 percent in the South and 16.7 percent in the West, but fell 35.3 percent in the Northeast and 50 percent in the Midwest in January.

The good news for agents and brokers working in the construction market is that the worst may be over.

"There's no question that on the ground we are seeing an uptick in builder confidence as to what 2013 and 2014 are going to bring," says George Dale of the Los Angeles office of Cove Programs, a managing general agency with a focus on U.S. homebuilders.

Dale describes builder confidence as moving from just "hanging on from a year and a half ago" to "cautiously optimistic" early in 2012 to feeling confident enough in improving market conditions "to bet in terms of buying insurance and staffing up" that 2013 and 2014 will be good years.

2. Manufacturing

Even in today's global, outsourced economy, the U.S. manufacturing industry is still big business.

Taken alone, manufacturing in the United States would be the 10th largest economy in the world, according to the National Association of Manufacturers (NAM).

The U.S. manufacturing industry generated $1.8 trillion worth of value, or 12.2 percent of the U.S. gross domestic product, and supports an estimated 17.2 million jobs, or about one in six private-sector jobs. And it continues to grow.

"Some sectors, such as electronics, computers, and related hardware, expanded at a very fast clip. Others lost ground to changing tastes and technology (think typewriters and payphones). In the 20 years ending in 2011, manufacturing output increased more than 55 percent," NAM said in its "2012 Facts About Manufacturing" report.

The United States produces the most goods and services overall as measured by GDP, and is far ahead of second-place China, according to the report.

Nearly three out of four leaders within the manufacturing industry have either expanded their product or service offerings in the past year, or plan to expand them in the coming year, according to a recent IndustryEdge survey of 200 professionals in the manufacturing industry conducted by Travelers.

2012 was a record year for manufacturing revenues, and the survey reinforces the view that expectations for 2013 are positive.

"All of this growth presents tremendous opportunities – and a host of new hazards throughout the complex, interconnected global supply chain," said Jim Mandes, manufacturing industry manager, Travelers Commercial Accounts. "Hazards may include less skilled workers, fewer suppliers to choose from and an increased potential for business interruptions."

The survey also found that finding and hiring qualified employees is a concern for manufacturers. In the past year, 88 percent of surveyed decision makers in the manufacturing industry either hired new employees or made plans to hire in the next year.

3. Healthcare

The Affordable Care Act in 2010 has pushed the healthcare industry into overdrive in a rush to meet new regulations under its guidelines. Healthcare initiatives known as accountable care organizations, or ACOs, are a major component of the new healthcare reform.

There are many factors and risks to consider when establishing and running ACOs. ACOs, which often consist of groups of physicians that practice different areas of medicine and can need insurance tailored to their individual specialty. Such scenarios make for a more complicated and expensive insurance policy when medical specialties combine into one entity, the experts say.

Insurers have been slow to respond with insurance services that address these new healthcare risks, according to Frank Castro, national practice leader for insurance broker Willis. Castro says insurers still don't understand or aren't comfortable with the new exposures ACOs present.

"ACO's with multiple stakeholders bring different risks to [carriers] like managed care E&O or physician's liability that they wouldn't have otherwise written and it becomes challenging," says Castro.

Willis opted to address the new coverage needs of ACOs last year when it unveiled a standalone insurance liability policy in partnership with insurer IronHealth. The coverage features several options, including: directors and officers (D&O) liability, managed care operations liability, medical professional liability, and general liability, to name just a few.

Castro says clients are looking for ACO and delivery model resources that go beyond just a specific product.

Evan Smith, healthcare underwriter and miscellaneous medical focus group leader for Beazley in Chicago, says buyers and brokers are not particularly happy with the current coverage offerings available to ACOs right now.

"Because ACO risks have a predominantly different structure than a typical healthcare physician practice, they have to buy a standalone insurance program; ACOs can't just be part of a [typical] healthcare program," says Smith.

As 2013 goes on and healthcare initiatives including ACOs continue to be formed, insurers will be increasingly challenged to find the most effective ways to meet the changing needs of their insureds.

4. Transportation

Rates in the transportation segment have risen steadily for the last several months. But indications of a harder market for this class haven't been enough to keep competition down.

Participants in NIP Group's Transportation Insurance Pricing Survey (TIPS) from the fourth quarter of 2012 believe more generalists are re-entering the segment compared to the third quarter because of significant rate increases in auto liability.

Players may also be trying to cash in on opportunity from a transportation bill passed by Congress that includes $1.75 billion in funding for transportation. Major roadworks projects that were delayed because of state budget deficits may now be able to go forward.

"All of the erosion of infrastructure that everyone has written about hasn't gone away," says Mark Reagan, Marsh global construction practice leader in Morristown, N.J. "The need in the country to build, and the need to find the money for that build is clear. For a lot of the country, the window for it (infrastructure construction) being an optional spend, that window closed or is closing."

Insurers like AIG and National Interstate are prepped and ready with new products aimed at the transportation industry.

At the beginning of this year, National Interstate launched a new traditional fuel distribution program to complement its captive fuel distribution business. The program will focus on residential propane and fuel dealers.

National Interstate also created a new program targeting waste operations, including residential, commercial and industrial collection; recyclers; construction and demolition debris removal; and landfills supported by a collection operation, to name a few.

AIG expanded its NextGen Protection products at the end of February with PLL Transportation and Logistics Protect, which is designed for clients who transport or arrange transport for both hazardous and non-hazardous materials.

5. Hospitality & Leisure With a better economy comes a better hospitality industry. As economic conditions improve, hospitality experts say there will be a change in the trend of "staycations," and more people will flock to the travel destination of choice.

In response, several companies expanded or enhanced products in the hospitality and leisure markets in the last year.

AIG's property/casualty division Chartis launched a hospitality and leisure industry practice group in 2012, which provides specialized insurance and risk management products for the hotel, amusement, gaming, restaurant, resort and theme park segments.

The Chartis Insurers also added PLL Hospitality Protect to their NextGen Protection suite of industry specific insurance products. PLL Hospitality Protect is offered with CrisisResponse and crisis management, which help companies mitigate losses and prevent reputational damage in the event of a crisis management event. The services provide an insurance product tailored to respond to the pollution exposures associated with the hospitality and leisure industry.

Insential and American Safety Insurance combined to offer a management liability program for the hospitality industry. The product offers employment practices, directors and officers and fiduciary liability coverage as either a package policy or standalone.

Leavitt Recreation & Hospitality Insurance (LRHI) launched a new program designed for archery clubs and ranges. The program offers general liability, property, equipment, commercial auto, worker's compensation, and umbrella policies.

6. Cyber Liability The small to medium-sized business segment has plenty of untapped privacy and security market potential – a fact that is not lost on insurers. The industry has turned up the heat when it comes to value-added services for cyber liability products especially targeted at small-medium enterprises (SMEs). Data breach notification tools, credit monitoring, and post-breach crisis management services, are just a few of the bells and whistles insurers are offering in hope of capturing more of the SME segment.

"In the small to mid-size segment, at least two thirds of your clients haven't bought yet," says Michael Carr, senior vice president of E&O underwriting for Argo Pro. "A good chunk of them probably will over the next couple years, either because they have come to recognize the exposure or because they have a contractual duty or even a statutory duty that requires them to do it."

The evidence supporting this untapped potential is not lacking, either. One survey conducted by the Ponemon Institute for Hartford Steam Boiler and Insurance Co. found that 55 percent of small businesses in the U.S. have had a data breach and 53 percent had multiple breaches. The survey also found that 70 percent of small business owners surveyed said they would purchase insurance to help pay for the costs if data is breached.

SME's awareness of their threat is also increasing, according to a survey from Zurich and Advisen released at the end of last year. Most small businesses see "at least a moderate threat to their organizations" from information security and other cyber risks.

And Marsh found in a new report titled, "Benchmarking Trends: More Companies Purchasing Cyber Insurance" that U.S. clients purchasing cyber insurance increased 33 percent in 2012 compared with 2011.

7. High-Net Worth

Many independent agents continue to struggle with maximizing sales potential in personal lines in general and in serving the personal lines needs of the wealthy in particular.

Estimating market share in the high net worth segment of the personal lines market is not as easy.

Bob Courtemanche of ACE Private Risk Services, says that less than one-fourth of the HNW personal lines market is insured with independent agency carriers that have products and services tailored for the affluent. He bases his estimate on a Conning Research & Consulting study in 2008 that pegged the HNW personal insurance premium opportunity at about $30 billion. Isolating the personal lines premium written by the carriers that specialize in the HNW market and then dividing it by the $30 billion, produces a rough idea of market share, he says.

The opportunity for growth in the high net worth market is one reason behind the creation of MarketScout's new Council for Insuring Private Clients (CIPC).

CIPC, which began operation last summer, was founded in response to the growing interest in this segment and a lack of resources for the commercial lines industry when it comes to insuring the class, says Richard Kerr, CEO of MarketScout.

The goal of CIPC is to provide a place where agents, brokers and carriers can go to share best practices, and, says Kerr, make market connections so those in the industry can learn from each other better ways to serve clients in this segment.

The council features carriers that specialize in this segment, with AIG, ACE Private Risk Services, and Fireman's Fund signing on as the founding strategic partners and new carriers joining now as corporate members.

Kerr says the underwriters who are getting involved are those who currently specialize in high-net worth insurance, but anyone can join the CIPC, even agents who aren't currently involved in the space.

8. Energy - Fracking The energy segment has been popping out alternative and green energy insurance products left and right for some time now. However, most insurers have been avoiding the highly-controversial hydraulic fracturing – or fracking – segment like the plague.

Fracking involves extracting natural gas from shale rock layers deep within the earth. It has become more prevalent recently because new technology makes the process more efficient and has allowed oil and gas operations to expand into new geographies. But the expansion does come with risks.

Rick Burns, president of Ryan Specialty Group's Global Special Risks (GSR) in Houston, says those drilling contractors that do not specialize in fracking may not have the needed technical expertise and thus may present a greater risk. Disposing of the water that is used during the fracking process could create a hazard, if not done properly. There is also a fear of the unknown on the part of insurers.

"This is extremely new technology. Insurers have said 'we need to take a look at this and see what we are insuring,'" he says.

Even so, Ryan Specialty's GSR has already responded by offering coverage for energy consultants who work in fracking environments. It offers a package policy with commercial general liability, professional liability, maritime employers liability and umbrella coverage.

GSR is also working on taking its existing well control product and making it more focused and readily available for those independent oil lease operators working with hydraulic fracturing.

MarketScout's Monster Insurance is also launching a fracking insurance program, which it hopes to have completed by July 1. Monster is also in the process of writing a white paper on fracking and the insurance industry to help educate the industry on the fracking process.

Given the increasing interest in finding new energy sources, fracking is not going away. Burns says he expects to see many more insurance products coming out in the next two years.

9. Mergers & Acquisitions

A surge in financial services mergers and acquisitions in the fourth quarter of 2012 has led to optimism that M&A activity will pick up in 2013, according to a survey by PwC (PricewaterhouseCoopers). There is also increased M&A activity in the healthcare sector as venture capital and private equity companies' look at opportunities in this space because of healthcare reform.

Evan Smith, healthcare underwriter and miscellaneous medical focus group leader for Beazley U.S. in Chicago, says they have seen many of these private equities "rolling up" small and mid-size mom-and-pop clinics or specialized medicine offices and making midsize companies out of them.

"I think as the economy improves and companies are sitting on cash, we will see a lot of mergers and acquisitions," he says.

M&A's can be a risky and volatile segment, say experts, especially with so many uncertainties in today's marketplace, which is why interest and demand for transactional risk insurance has increased. The coverage insures against the legal, financial, tax or regulatory risk that arises from extraordinary transactions like mergers and acquisitions.

According to a Marsh study last fall, demand for transactional risk insurance was up 35 percent from June 2011 through June 2012 and in January, Lloyd's of London said they have seen an increase in demand for insurance relating to M&As.

Most recently, Aon Risk Solutions launched a new transactional risk liability practice "to capitalize on the exponential growth" it sees in this market.

Concord Specialty Risk is a unit of Ryan Specialty Group that focuses on insurance for extraordinary transactions like mergers and acquisitions. Dave DeBerry, CEO of Concord says the percentage of U.S. M&A deals that now consider this coverage has increased by close to 20 or 25 percent, but there is no reason why it can't be higher.

10. Reputational Risk Companies are more at risk than ever from social media and the 24-hour news cycle that can turn even the smallest mistake into a highly-publicized event that can damage a company's image beyond repair.

In 2011, Aon and Chartis launched specific products aimed at helping companies protect and manage their reputations, as well as a crisis response service to help minimize reputational damage and restore a company's image. Willis went a more niche-specific route and launched Hotel Reputation Protection 2.0 specifically for the hotel industry.

It appeared at the time that insurers had recognized an underserved area of the market and were taking steps to fill the void with reputational risk products. But in 2012, most of this market was very quiet.

Only two major insurers launched new standalone reputational risk products in 2012, bringing the total number of reputational risk-specific products to five. In April, Munich Re launched a product to cover financial loss from a reputational risk event that mainly targets business to consumer companies. Later in the year, Allianz released Allianz Reputation Protect that helps respond to a crisis incident and provides a risk assessment to see how a company is currently perceived by the media and public.