According to Marsh's Construction Insurance Market Update 2025, premium reductions averaged between 5% and 15% in the first half of the year. Specifically, contract works insurance saw an average decrease of 5%, while design and construction professional indemnity premiums fell by approximately 10%. This marks a stark contrast to the upward trajectory observed in previous years.
The softening market is attributed to increased capacity and the entry of new insurers since 2024, intensifying competition and providing clients with a broader range of options. For instance, construction liability insurers have doubled their available primary capacity from $25 million to $50 million in many cases. To retain business, incumbent insurers have offered discounts and long-term agreements with built-in concessions.
Despite the favorable pricing environment, insurers are maintaining rigorous underwriting standards. Risk engineers are being deployed more frequently to assess complex or high-value projects, ensuring accurate pricing and risk assessment. Insurers remain particularly cautious with accounts that have deteriorating claims experiences or exposure to natural catastrophes.
Claims inflation has emerged as a point of tension, with disputes over reinstatement costs delaying settlements. Insurers are scrutinizing supplier cost increases, and the involvement of insurer-appointed law firms has further slowed the claims process.
Looking ahead, Marsh anticipates that competition will persist through the remainder of 2025. Builders and contractors are encouraged to leverage this environment by engaging in well-structured renewal strategies. Providing comprehensive risk information and demonstrating robust risk management practices around site safety, project timelines, and contractual allocations will be crucial in securing optimal terms.
In summary, the current market dynamics present an opportune moment for construction professionals to review their insurance programs. By proactively engaging with insurers and showcasing strong risk management protocols, businesses can capitalize on the competitive landscape to secure favorable coverage and pricing.
