RT Specialty’s Environmental and Construction Professional (RT ECP) practice has released its 2024 market update, providing an overview of the construction insurance and risk management sectors.
The report aggregates insights from RT ECP brokers, brokers, and carrier representatives to offer highlights of current market conditions and the dynamics influencing this niche field.
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Looking ahead, RT ECP predicts an uptick in claims activity across its coverage platforms in 2024, attributed to ongoing social inflation and a more sophisticated plaintiff’s bar. This trend is expected to prompt updates and restrictions in environmental coverage terms and conditions within standard market policies.
In addition, the firm expects a decrease in limit capacity for project-specific professional liability, prompting close monitoring of market changes, policy updates, and carrier responses to specific claim areas.
In the contractor’s pollution liability (CPL) segment, capacity remained robust in 2023, with new carriers entering the market and some offering limits up to $50 million per claim/aggregate. Rates have stayed competitive, and 2024 is expected to see expanded capacity and market entry, with rate stabilization for insureds exhibiting flat exposures and clean loss histories.
The pollution legal liability (PLL) market experienced a significant downturn in transaction volume in the early half of 2023, indicating investor caution. The first half of 2024 is expected to continue this trend due to ongoing inflation pressures. Additionally, underwriting scrutiny is expected to increase for certain sectors and markets with specific exposures or business classes.
For general liability/pollution legal liability (GL/PLL), rate increases have started to stabilize, varying by market and excess quoting practices. Despite challenges posed by catastrophic events, carriers have generally seen growth thanks to underwriting discipline. The sector is bracing for continued rate hikes in excess due to automobile rate increases and a rise in GL/PLL claims.
The GL/CPL/professional liability (PL) market has experienced double-digit rate increases, especially for environmental contractors with significant fleet exposures. Looking into 2024, more carrier flexibility and enhanced coverage options are expected for larger environmental contractors, with rate increases expected to be 5% or less for better performing contractors.
Architects and engineers professional liability (A&E PL) carriers are adjusting their risk appetites, with many seeking to limit capacity or increase rates. RT ECP forecasts rate pressure for professionals involved in residential, infrastructure, or geotechnical projects in 2024.
The contractor’s professional liability (CPrL) market, meanwhile, with over 35 carriers offering common capacity up to $10 million, is expected to see a robust construction market in 2024 partly due to expected mid-year interest rate drops. However, carrier scrutiny regarding design and project type, particularly for condominium projects, is expected to intensify.
For owner’s protective professional indemnity (OPPI), market pricing can vary significantly, with some carriers adopting a conservative approach while others are more aggressive. OPPI is projected to remain a vital risk transfer option for owners/developers.
Finally, the real estate developers (RED) professional liability market is poised for growth, driven by increasing demand from investors and lenders seeking to mitigate economic risks. This coverage area, now served by eight carriers, is expected to see heightened interest in 2024 as the sector navigates economic challenges.
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