What we have seen in June renewals
June renewals are more negotiable than in the hard market, but insurers remain selective around worker-to-worker exposure, subcontractor controls, cladding, imported materials and labour hire. Increased insurer appetite has translated into more flexible programme structures, broader coverage options and improved pricing for well-performing accounts. Both local and overseas insurers remain active participants, supporting a diverse and competitive marketplace for construction liability.
While straightforward and lower-risk accounts have benefited from competitive conditions, insurers are applying closer scrutiny to complex, high-severity and loss-impacted risks. This includes projects involving large infrastructure works, underground works, tunnelling, marine activities, residential high-rise builders, and plumbing and fire services. Insurers continue applying heightened scrutiny to tunnelling and underground works, marine construction exposures, blasting activities, dam and energy infrastructure projects, coal and mining-related operations, catastrophe-exposed locations and projects with US exposure.
Mega-projects including data centres, hospitals, transport infrastructure and renewable energy developments continue driving demand for higher liability limits and more tailored insurance structures. However, these projects also introduce elevated claims severity concerns, longer project timelines and increasingly complex contractual risk transfer arrangements.
The overall outlook for the Australian construction liability insurance market remains positive heading into the second half of 2026. Strong insurer participation increased excess layer capacity and healthy competition continue benefiting policyholders through improved pricing outcomes and greater structural flexibility.
Premium pricing trends
Pricing is flat to -10% for disciplined contractors and +5% to +15% for heavy worker-to-worker, poor subcontractor management or adverse claims. Despite growth in available capacity, overall adjusted levels remain below the 2017 peak, and significant pricing reductions have generally been confined to simpler, well-performing risks.
Insurer behaviour
Insurers are chasing good construction liability business but remain rational on long-tail bodily injury and defect exposure. The relatively high interest rates are also enticing insurers to funnel their global capacity to Australian divisions, keeping the market oversupplied. However, insurers remain disciplined in their underwriting approach, particularly around technically complex, high-hazard or loss-affected risks.
Claims trends
Claims trends include worker injury, labour hire, product substitution, cladding, defects, psychological injury, contractual disputes and supply-chain failure. Inflationary pressures, rising claims severity and increased legal costs remain key market concerns.
The continued rise in workers’ compensation losses, particularly psychological injury claims, is the most significant structural challenge facing the market. Insurers’ claim reserve costs continue to trend upward, return-to-work timelines are lengthening, and claims volatility is contributing to deteriorating combined loss ratios. Insurers are adjusting their underwriting approaches in response. Firms demonstrating proactive psychosocial risk management and timely and diligent incident reporting are better placed to access competitive terms.
Construction and rectification costs remain elevated. Even moderate incidents now generate losses well above historical benchmarks, weighing on underwriting profitability and reinforcing caution around high-value projects. The ongoing fuel crisis has exacerbated inflationary pressure further.
PFAS exclusions are now standard across the Australian market and increasingly shaping underwriting in Asia-Pacific. Beyond PFAS, insurers are scrutinising site contamination, third-party property damage from environmental events and contractor-generated pollution, particularly on long-duration civil projects.
Firms importing construction materials directly from overseas carry Deemed Manufacturer status under Australian law. As supply chains have become more international and more unstable, this exposure has grown. Insurers are requesting greater detail on import quality assurance procedures, and losses emanating from import exposures are trending negatively for insurers.
Longer project timelines extend the period during which incidents can occur and complicate handover of completed operations liability. Clear policy continuity and precise handover and phased handover definitions are essential for multi-year programmes.
A significant variance in claims outcomes has been observed across the market. Whilst some insurers continue to provide excellent and swift claims services, others have performed poorly. This could be because of the shortage of talent in insurer claims management and loss adjusting services, or due to soft market pressure on insurer profitability leading to minimum staffing levels.
Legal and regulatory developments
Halifax Vogel / Alucobond and Shangri-La should be read together: broad product theories may narrow, but building-specific professional, management and director exposure remains live.
AI and technology impact
Digital induction, safety analytics, site monitoring and subcontractor compliance platforms can support underwriting and claims defence.
What policyholders should do now
Review contractual indemnities, worker-to-worker exclusions, subcontractor insurance evidence, principal-controlled arrangements, cladding disclosures and imported product controls. Risk allocation should be clearly defined and flow consistently through the contract chain. Well-maintained documentation, including incident records, Safe Work Method Statements and project files — supports faster claims response and stronger defence of worker-to-worker claims.
Structured psychosocial programmes with clear policies, early intervention and return-to-work frameworks are increasingly factored into underwriting assessments, particularly as psychological injury claims continue to drive loss activity. A detailed, well-prepared submission supported by strong claims performance gives underwriters more to work with and typically produces more accurate pricing and broader cover. Insurer continuity matters in a long-tail class — switching markets for short-term premium savings can carry meaningful risk at claim time.
Projects with extensive contractual obligations or principal-driven insurance requirements warrant careful review during placement. Coverage gaps, conflicting indemnity obligations and misaligned policy periods are common issues that are best identified and resolved before a contract is executed.
Underwriters assess incident rates, near-miss reporting and subcontractor oversight as indicators of risk quality. Firms that can demonstrate genuine, ongoing improvement are better placed to secure competitive terms.
It is important that claims are a key consideration when determining your insurance partner. Given the current market conditions, there are opportunities for reductions in price; however, your business will benefit more from a claim being resolved efficiently and quickly, allowing you to get on with the job, as opposed to a small premium reduction at renewal and a poor claims service. Firms that invest in risk management, contractual discipline and proactive insurer engagement will be best placed to sustain favourable outcomes.
Continue reading our full range of market updates:
- Insurance Market Overview: July 2026
- Claims
- Workplace Risk
- Corporate and Multinational Risk
- Construction, Property and Development
- Financial Lines
