For many years previously, overcapacity in the PI construction market resulted in very broad coverage and premium reductions; consequently insurers and brokers had to battle to turn a profit.
Since the market has moved, those insurers who haven’t completely exited these lines have instead reduced appetite, increased premiums and excesses or looked to focus on larger layered programmes, whilst brokers have struggled to place certain risks.
The 2017 Grenfell fire has often been cited as a key cause, although opinion is divided on whether this was merely a catalyst for an already declining market. The tragedy certainly increased awareness around fire safety and heightened concerns surrounding the use of cladding, particularly Aluminium Composite Materials (ACMs) and the ensuing potential for some extremely expensive claims.
In fact, PI construction claims have generally increased due to more large-scale and complex construction projects which inevitably carry higher risk. As a result, insurers are offering brokers lower limits and are less inclined to negotiate terms.