Competition drivers softer conditions in London construction market: Willis

By Michael Jones

March 24 - The London construction market is transitioning towards softer conditions as competitive dynamics generate more favourable dynamics for insurance buyers, Willis said in its Q1 global construction rate trend report.

• London market insurers offer broader coverage at lower premiums to attract clients

• European market shows good capacity, but restrictiveness on complex projects

• US construction rates expected to rise in 2025 due to social inflation and nuclear verdicts

Willis said that insurers are increasingly willing to offer broader coverage at lower premiums in order to attract and retain clients. This has led to increased competition and improved follow capacity.

Mid-term projects continue to be supported by the London market, with the market’s subscription model helping it to offer competitive premiums and comprehensive coverage where other carriers are unable to.

Willis said first-quarter rate movement in Great Britain has been flat to minus 10% in general liability, single-project CAR and single-project EAR. Annual program CAR has seen rate movement of flat to minus 5%

The European construction market has seen good capacity, said Willis. However, the broker said there is a degree of restrictiveness depending on the complexity of the project.

Insurers are said to be increasingly selective with renewables projects given the recent claims experiences. There has also been greater concern and awareness around project ESG credentials, with insurers shying away from publicly controversial projects.

Willis said first quarter rate movement in Europe has been minus 5% to plus 5% in general liability, while single project CAR/EAR and annual CAR/EAR has seen rates of minus 10% to plus 10%. Professional indemnity has seen rate movement of minus 5% to plus 5%.

The US is expected to see increased rates in 2025 relative to the prior year due to factors including social inflation, nuclear verdicts and plaintiff-friendly juries.

Willis said new markets have emerged in the casualty and excess sectors, although challenges persist in the “unsupported” auto and lead umbrella where appetite and capacity is limited.