What we have seen in June renewals
June renewals improved for well-managed projects, but insurers remain cautious on water damage, high-rise residential, complex civil, flood exposure and stressed counterparties. The Australian market remains competitive, though it is a selective market and quality risks are being rewarded depending on the nature of the construction works and the operations and activities being undertaken.
Local capacity remains strong for both annual programmes and single project placements, with insurers actively competing for quality commercial, industrial, infrastructure and civil construction risks. For larger or more complex projects, Lloyd’s and MGA cover holders have shown interest in supporting where higher limits are required, with additional follow capacity also available for larger value exposures.
Residential construction remains a selectively underwritten segment. Insurers have shown interest in supporting well-structured residential and build-to-rent developments, while speculative projects may attract greater underwriter scrutiny due to accumulation risk and insolvency exposure where builder and/or developer experience is limited.
The key growth areas within Australia’s construction pipeline are large civil infrastructure projects and technology-driven facilities such as data centres. The strong global demand for AI-driven digital infrastructure is accelerating construction activity across Australia and globally, driving increased insurance demand and requiring underwriters to expand capacity or co-insure to meet significantly larger project limits.
Rising construction costs, the fuel crisis and general supply chain instability have driven greater interest in modern construction methods such as modular builds. While insurers continue to support the adoption of modular construction, they remain cautious due to the limited long-term claims experience associated with this construction method.
Underwriting focus remains on manufacturing quality and transit risk, particularly where entire bathrooms or wetrooms are completed off-site and transported as high-value finished modules.
To achieve favourable insurance outcomes, policyholders should continue to focus on early insurer engagement, strong risk management practices and clear project governance.
Premium pricing trends
Well-performing annual programmes are achieving flat to modest rate reductions of up to 10%, with similar outcomes on single project placements depending on risk profile and claims history. Pricing is flat to +10% for complex or water-damage-prone projects.
Insurer behaviour
Insurers are competing, but they still require detailed project controls. This is a softening market, not a careless market. Insurers remain diligent when requesting risk information, including geotechnical reports and severe weather management plans.
Claims trends
Claims trends include water damage, defects, delay, weather, theft, subcontractor insolvency, escalation costs and defective design interfaces. Water damage remains the dominant cause of claims, with malicious damage and on-site theft, including copper wire cabling, plant and equipment, also contributing significantly to insurer losses, particularly where sites are vacant or works are completed in stages. Cyclone or windstorm sub-limits can be imposed on some larger projects; however, separate top-up cover is available.
Works exposed to natural catastrophe regions above the 26th parallel, as well as those with adverse claims history, continue to face heightened underwriting attention.
The scale and complexity of data centre projects may challenge traditional insurance capacity, particularly where large aggregate limits are required, and this could place pressure on current soft market conditions for this sector. Insurer focus here is on testing and commissioning exposures.
A significant variance in claims outcomes has been observed across the market. Whilst some insurers continue to provide excellent and swift claims service, others have performed poorly, which may be attributable to a shortage of talent in insurer claims management and loss adjusting services, or to soft market pressure on insurer profitability leading to minimum staffing levels.
Legal and regulatory developments
Budget tax and housing reforms may alter project feasibility, pre-sales, investor demand and commencement timing. The recent proposed changes to negative gearing and capital gains tax concessions could shift investor demand away from residential housing, potentially redirecting capital toward higher-yielding commercial assets. Cladding and building defect cases remain relevant to project risk allocation.
AI and technology impact
Building Information Modelling (BIM), digital QA, drone inspections, leak detection, project dashboards and site sensors can materially improve underwriting presentation.
What policyholders should do now
Prepare detailed water management plans, QA evidence, programme controls, subcontractor vetting, delay mitigation and financing/construction status. Use competitive conditions to improve DSU/ALOP and defects wording where appropriate. Demonstrating contractor experience, robust quality assurance processes and a proactive approach to mitigating claims and site security exposures will remain important differentiators when seeking capacity and competitive rating.
Claims should be a key consideration when determining your insurance partner. Given current market conditions, there are opportunities for premium reductions; however, your business will benefit more from a claim being resolved efficiently and quickly, allowing you to get on with the job, than from a small premium reduction at renewal and a poor claims service.
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
