Gallagher: International construction showing early stages of softening

By Michael Jones

June 30 - (The Insurer) - Increased competition in international construction has led to the class showing the early stages of softening in some sectors, Gallagher said in a report on Monday.

• Non-traditional players enter market amid modest transition speed

• Players look to maintain market share due to potential for further softening

• New entrants and expanded teams drive competition in casualty construction

The broker said the speed of transition in the line of business was modest, which has prompted some non-traditional construction players to enter the class.

Markets remain disciplined with the objective for many being a return to a level of profitability. The broker said adequate appetite remains for major international construction risks, except for a slight lag in the deployment of available capacity for the largest mega projects.

But the potential for further softening and increased competition throughout the rest of 2025 has caused many players to look to maintain their current market share.

While top-line growth is modest, Gallagher said more markets are seeking to write larger participations.

And all but the most challenging placements are being completed in line with leaders' terms and in many cases are oversubscribed.

Gallagher said there are several new entrants into the sector, mainly MGAs or smaller follow capacity.

New lead capacity is also expected to enter the market over the coming months, which will stimulate further competition.

CASUALTY CONSTRUCTION

Signs of a descent for insurers in the casualty construction market are also ongoing, with the targets for new business having continued to grow.

Remarketing of annual contractors' accounts is met with vigour and competition, Gallagher said.

Long-term agreements are also returning. The broker said these are typically offered on a flat basis but many have offered pre-agreed discounts for well-performing risks to compete to win accounts.

Claims cost inflation will continue to have an effect with retention becoming more important, Gallagher said.

New entrants and the expansion of existing teams in the international casualty market has driven more competition.

Gallagher said this has seen clients turn to Lloyd's for consistency and longevity over domestic rivals.