Construction Market Update

Thu 25th February 2021

 

Since 2018, the construction insurance market has undergone an acute change, transitioning firmly out of a very soft market. Entering 2020, contractors were prudent about their business prospects. But no one was prepared for the across-the-board disruption caused by the pandemic or the aftereffect that is likely to carry on well into a 2021 hardening market.

In the first quarter of 2020, we witnessed continued rate increases, requests for more information and risk management engagement, as well as increased deductibles, and some of the broad coverage of the past becoming much harder to obtain. This happened before COVID-19 really kicked in, at which point we all had to become accustomed to negotiating over the phone, or via various video conferencing platforms. It is fair to say that we have now entered a time in the insurance market that none of us has ever encountered before, nor want to see again, although we might need to get used to this for a while longer.

Like most other business sectors, the construction industry is looking with uncertainty at 2021 that will certainly continue to be affected by the ongoing pandemic as the virus mutates. Balancing opportunities with risks has always been the central challenge for contractors, Now, more than ever, the role of a broker is very important and construction companies need to partner with experienced brokers in order to ensure their story is pitched well to the insurance marketplace, pairing them with the right carriers, right-sizing coverage and tightly managing costs.

The economic shutdown delayed many projects that had been in the bidding or final stages. Significant material/supply chain disruptions jeopardized schedules and operations. Contractors also were hit when subcontractors couldn’t report to jobs, either because their people were exposed to the virus and subject to quarantines, or because they were unable to meet health guidelines.

Specific Areas of Concern

Residential Sector

As the market hardens, insurers are particularly cautious with any portfolio that has a poor claims experience or includes risks outside of their core underwriting appetite, resulting in increasing premium rates and restricting cover. Despite this, there is still a wide appetite to underwrite well risk-managed residential portfolios.

Water Damage

Water damage is a significant market concern. Insurers are keen to work with brokers to identify sites that perform poorly from a claims perspective. Many markets are encouraging clients to follow the advice in Managing Escape of Water Risk on Construction Sites, the guide issued by the Construction Insurance Risk Engineer Group.

Timber Frames and Cladding

It is fair to say that timber frame buildings continue to be a challenging area for the insurance market. The rates for timber frame buildings can be greater than those of a steel frame build, and policies can come with higher excesses. Following the Grenfell fire tragedy in June 2017, underwriters have been cautious about cladding. A greater understanding is sought of the full construction methods, with a focus on the composition and installation of cladding, particularly with projects that are more than 18 metres high.

Cyber risk – a growing concern

Following 2021 reinsurance treaty renewals all reinsurers have cyber cover exclusions, and as such there are a lot of processes that leave an open door to cyber risk. Many contractors buy policies where cyber is blended with their professional indemnity insurance. The protection offered by such policies might be limited versus a stand-alone cyber policy. Therefore, decoupling cyber for broader protections will also result in better terms and conditions. As cyberattacks are intensifying, especially during the Covid-19 crisis, the construction industry had not been spared. There’s been a notable uptick in cyber claims, and construction is particularly vulnerable to social engineering. This involves a cyber-criminal impersonating senior management or important vendors, using business email compromise tactics and effecting the release of large sums of money or information that can be monetized. To avoid the risk of a cyber-breach, firms should periodically undergo audits of their cybersecurity environments. An experienced broker can provide a great insight and guidance on cyber insurance policies making sure these are adequate for the business.

Contractors’ financial health under pressure

The industry is working with weakened balance sheets and compressed profit margins due to the pandemic’s impact. Many contractors had to cover unbudgeted labour costs as they tried to catch up on jobs delayed due to numerous virus-related reasons.

Contractors and subcontractors should count on their brokers to keep them on top of developments in the SDI and surety markets. Risk selection is another important factor in a hardening market as insurers tend to become choosier in whom they agree to insure. For subcontractors, it points out the need to self-market by sharing a good risk management track record with safety successes. For general contractors, it’s important (for any type of insurance) to demonstrate how quality, as much as safety, is managed on the job site. Quality has always been an important differentiator for contractors, and is now emerging as an important insurance underwriting (risk selection) factor as well.

Respecting the continuing risk of pandemic

As we’ve rolled into 2021, new virus mutations will constitute a continuing operational risk for the industry. The pandemic will continue to haunt supply chains as well, with knock-on effects impacting both budgets and schedules this year. Contractors are being reminded of the difference between an “efficient” supply chain and a “resilient” one.

The insurance industry will be hit hard by COVID-19 exposures, with the full extent of them not yet known by the industry.

Navigating the Market

In order to limit cost increases and improve risk profiles for their construction clients, retail brokers will need to look for the right wholesale broker that has ties with the Lloyd’s and London market and an excellent knowledge for the construction industry. Citynet Insurance Brokers has been established for over 20 years and their experience within the construction industry is an unparalleled one.

 

What can construction companies expect in 2021 

Whilst businesses and industries were impacted by COVID-19, some more than others, all had to adapt. Fortunately, construction was considered an essential business, so for the most part, the industry did well i­­­n 2020.

As the industry works to rebuild this year, insurance renewals are likely to be tough as underwriters consider stressed financials and other issues and trends that pose risks to the sector’s recovery, short and long-term.

Trying to forecast where rates will go this year is at best an educated guess. Every account is underwritten individually and ultimately pricing will be affected by risk control strategies and loss histories.

The challenges here will be heightened by a hardening insurance market, where rates trend higher as availability tightens. In this environment, contractors should expect their insurance brokers to be their partners and advisors in anticipating the risks ahead and shaping the strategies to manage them effectively.

 

Please download this article in a pdf format here.

 

Construction Insurance

Tue 23rd February 2021

 

End of Lockdown Roadmap

Mon 22nd February 2021

 

It is almost a year since our lives have been turned upside down by the novelty virus that was to be SARS-CoV-2 mostly known as the Covid-19 virus! #WFH – working from home was to become one of the most trending hashtags and companies had to re-evaluate their IT processes in order to make sure their employees could work securely from the comfort of their homes and at the same time taking care of their customers, offering them the best service they could.

As winter is coming to an end and spring is set to take over the post-lockdown roadmap is laid out before us. This roadmap already brings a renewed sense of optimism across the country, with the UK vaccination programme paving the way for easing the current restrictions. As schools, colleges, and universities reopen, parents regain their equilibrium and hand back their home-schooling duties to teachers who we now view as saintly!

So what are the key dates we need to remember?

March 8th

• Students return to schools and colleges
• Care home residents are allowed one regular named visitor

March 29th 

• Limited outdoor gatherings are allowed in private gardens
• Outdoor sports facilities reopen
• ‘Stay at Home’ becomes ‘Stay Local’

April 12th 

• Non-essential shops and personal care premises reopen
• Public buildings and most outdoor attractions reopen
• Self-contained accommodation is available for booking

May 17th

• Social contact rules are lifted
• Limited indoor mixing is allowed and indoor hospitality reopens
• Sporting venues reopen at reduced capacity
• Larger outdoor events reopen at reduced capacity
• Indoor hospitality reopens

June 21st 

• The last closed businesses – such as nightclubs – get back underway
• Limits on large events and performances will be lifted

 

If you would like to find out more about our insurance products, or you need help with placing a risk, please get in touch with your Account Executive or contact our Development Executive Lee Raikes on [email protected]

Lloyd’s proposed transfer of certain EEA insurance business to Lloyd’s Brussels

Mon 6th July 2020

 

Lloyd’s is proposing to transfer certain EEA insurance policies to Lloyd’s Brussels. The proposed transfer will not change terms and conditions of any policy, except that Lloyd’s Brussels will become the insurer and Data Controller in respect of the transferred policies. Further information about the proposal (including whether it could affect your pre-transfer position), which policies are transferring, your rights and what you need to do can be found at  lloyds.com/brexittransfer

 

Should you have any queries please contact Mark Crisp at [email protected] or call 020 7488 6708

New Facility Available

Tue 12th May 2020

 

Here at Citynet, we understand the difficulties your clients are going through during these unprecedented times.

Behind the scenes, we have been working hard with our existing insurers to manage your clients’ insurance requirements, as well as continuing to explore new markets.

Citynet Insurance Brokers are pleased to confirm that we can now offer insurance solutions in partnership with Convex under our new facilities. Convex was launched to the market last year with $1.7bn of initial committed capital to underwrite insurance for complex specialty risks.

The company, set up by Stephen Catlin and Paul Brand, has an A.M. Best rating of A- (Excellent).

Citynet has long-standing relationships with the underwriters who have recently joined Convex, which allows our team of brokers to negotiate the best possible deals for your clients. Citynet and Convex can provide insurance solutions for your clients within the Construction, Entertainment/Leisure, Manufacturing, Engineering, and Transportation industries, amongst many more.

Here at Citynet, we more than fully understand your clients’ needs and provide you with the specialist knowledge and expertise you need, when you need it.

For more information about our New Facility, please contact our Broking Director – Matt Carlick by using the below contact details: 

07890 545 417
[email protected]

 

 

 

 

Citynet Insurance Brokers contribute towards Cobra London Markets charity project to keep “The Blood Bikers” wheels spinning for an entire year!

Mon 25th November 2019

 

Citynet Insurance Brokers contribute towards Cobra London Markets charity project to keep “The Blood Bikers” wheels spinning for an entire year!

Here at Citynet Insurance Brokers, we are no strangers to helping our community with every chance we get. Throughout 2019, we have been sponsoring local youth sports clubs in the UK and Ireland (football, rugby, boxing), school holiday clubs, etc.

This time, we have risen to the challenge of helping the community yet again by contributing towards Cobra London Markets’ chosen charity – SERV (Service by Emergency Rider Volunteers)  to raise sufficient money to sponsor a blood bike’s fuel costs for a year.

SERV is the name used by a number of blood bike charities based in England, whose volunteers provide a motorcycle courier service, free of charge, to the National Health Service and the air ambulance charities. Their volunteers work outside normal office hours and use either their own or the charity’s dedicated response motorcycles to transport items such as blood for transfusion, blood samples for pathological or microbiological analysis, drugs, patient notes, x-rays, scans, medical equipment, samples, vaccines and donated human breast milk.

The Blood Bikers are totally funded by public donation and Citynet together with Cobra London Markets saw an opportunity to help the community when it needs it most.

 

 

Unite against Dementia for the Insurance Day of Giving!

Mon 4th November 2019

 

Insurance Day of Giving” gets Citynet Insurance Brokers involved once again in the fight against Dementia.

We have had a tremendous day at Citynet HQ, raising funds for the ‘Insurance Day of Giving 2019’.

Almost half of the 300,000 people working in the UK insurance sector will be affected by dementia either directly or through a loved one. Despite this, a great deal of stigma still remains. By bringing dementia into the conversation, we can raise vital awareness and show colleagues that they don’t have to face dementia alone.

Last year, the Day of Giving raised an incredible £70,000 for research into the cause, care, cure, and prevention of dementia. This year the goal is £100,000.

This campaign, meant to help people affected, is part of the Insurance United Against Dementia (IUAD) and has now the backing of more than 50 insurance firms. As an Alzheimer’s Society initiative, this event is aiming to raise £10 million in the next five years to help fund their world-leading research to improve care and ultimately find a cure against this cruel disease, empowering people affected to live the lives they want.

In the spirit of collaboration, Citynet and PIB Group have united for the second year to raise funds with every employee committed to helping spread awareness of what dementia is, as well as where you or your insurance colleagues can find support if affected by this killer disease.

We are extremely glad to announce that Citynet’s together with PIB Group companies have raised a total of £10,000 for this years IUAD.

One Industry. One goal! Let’s all unite to take on the 21^st century’s biggest killer!

 

Donate now!

 

 

Citynet exhibited at #BIBAScotland 2019

Wed 30th October 2019

 

The #BIBAScotland Conference is the only event dedicated to insurance brokers in Scotland. This years’ event saw more than 200 industry representatives in attendance and was the perfect opportunity to keep up to date with the latest developments, meet new contacts and conduct business.

Following tremendous successes in the past years, Citynet Insurance Brokers exhibited at the #BIBAScotland for the third year running.

Acting purely as a wholesale insurance broker, Citynet has established itself as a London Market Specialist in the placement of Liability, Property, Professional Indemnity, Terrorism, Cyber, Motor, and various associated classes.  We also specialise in the placement of binding authorities for other insurance intermediaries.

If you are looking for a wholesale broker that has great insight and knowledge of its markets and deliver on their promises, look no further! Citynet will be proud to be Your Trusted Partner!

For further information about our services or schemes please get in touch with our team members below or get in touch with your account executive.

 

Graeme Flynn – Head of Motor – UK & Ireland   E: [email protected];  M: 07977 011 433

Matt Carlick – Broking Director E: [email protected];  M: 07890 545 417

Matt Wadhams – Account Executive  E: [email protected];   M: 07773 470 813

Hugh Cleland – Insurance Broker  E: [email protected];   M: 07557 343 578

 

WHO IS THE WINNER?

We are delighted to announce that the winner of our prize draw where a Tipsy Tree Advent Calendar was up for grabs is Mr Tom Aldridge from Blackford Insurance.

Huge congratulations from all of us at Citynet.

 

Building broker business in the construction insurance sector

Mon 7th October 2019

In the midst of chaos, there is opportunity!

The famous quote from Sun Tzu in The Art of War may not have been intended for the insurance industry – but it is one that stands applicable especially now in relation to the construction sector where the building blocks appear to be crumbling. The July 2019 IHIS Markit construction purchasing managers’ index dropped to its lowest levels since April 2009.

“According to the latest survey of industry executives, the UK construction sector is suffering a loss of momentum, led by the sharpest reduction in new work since March 2009,” Matt Carlick, Broking Director at Citynet Insurance Brokers, told Insurance Business. “As the market tightens, some insurers are looking into decreasing the number of brokers they do business with.”

At the heart of the problem appears to be a shortage of skilled workers, leading to greater use of LOSC and BFSC contractors, according to Carlick.

“Greater use of lower-skilled or non-skilled workers who tend to be less experienced in a particular trade or are new to a company and therefore less aware of the H&S culture of an insured,” he said. “Due to a skilled worker shortage, there is a danger that the cost for these employees increases which can negatively affect profit margins and therefore the funds available for investment in H&S initiatives.”

Amid the clouds, however, there are plenty of silver linings – and savvy brokers have plenty of opportunities to be the cement that keeps businesses watertight amid the onset of economic bad weather.

“Despite the comments about retrenchment in the UK construction sector, underwriters would suggest that they are seeing small organic growth for London and South East based risks,” added Carlick. “This also means an increase in estimates for LOSC and BFSC payments which bring their own insurance issues with them.”

“Of course, there are concerns about the current business outlook and these are overwhelmingly attributed to domestic political uncertainty,” continued Carlick. “The construction sector hasn’t been left unaffected by this current climate. Rising risk aversion and tighter budget setting by contractors in response to Brexit uncertainty can hold back activity, especially in the commercial sub-sector.

“The key is to work with a specialist – and, as wholesale brokers, Citynet has a proven ability to build and maintain relationships with underwriters which is essential to ensuring that the best deal is on the table for our retail broker clients.”

Finding the best deal also means finding the right policy for clients. While each business will have different individual needs, Carlick believes there are certain important areas of a construction policy that every broker should look for.

“Important areas of a construction policy include cover for asbestos; attitude towards criminal defence costs; height and depth limits – ideally there should be none; cover for hazardous locations/activities; attitude towards rehabilitation; insurers’ flexibility to be able to deal with mid-term amendments which are hazardous and/or unusual,” he said.

Above all, however, it’s about finding a trusted partner, Carlick believes – one that has “its’ fingers on the pulse of this dynamic market” and “strong market relationships.”

 

Source: Insurance Business UK

#MacmillanCoffeeMorning at Citynet HQ

Wed 2nd October 2019

 

The #MacmillanCoffeeMorning has become a ‘tradition’ that started almost 30 years ago, in 1990.

Initially, it was a rather small affair with a simple idea: guests would gather over coffee and donate the cost of their cuppa to Macmillan in the process. It proved to be very effective and since the Macmillan Coffee Morning event has become a yearly ‘tradition’ raising over £200 million.

Last year alone, this event has raised an incredible £26,914,382 towards this great cause.

On the 27^th September 2019, people all over the country took part in an activity that was tasty, fun and also helped raise funds and awareness for a truly worthy cause.

Cancer can be devastating news for anyone. With one in two of us facing this ‘enemy’ at some point in our lives, the money raised at the #MacmillanCoffeeMorning event throughout the UK will help everyone with cancer to live life as fully as they can.

Here at Citynet Insurance Brokers, all our staff got involved again in the world’s biggest #MacmillanCoffeeMorning.

Each and every one of us has made a special effort by baking, buying and bringing in the most delicious treats. As a result, we are very proud to announce that the Citynet Insurance Brokers team has raised a total of £592.74 that will be donated to Macmillan Cancer Support.

Well done everyone and what a team effort!

Let’s change lives with every slice!