Insurance appetite and capacity
The insurance market for construction professionals remains soft. We see continued strong appetite and deployment of more capital in this sector, from Lloyd’s as well as local and international insurers.
The SME sector is particularly active and attractive to insurers with the market cycle clock moving past 3pm for SMEs. There continues to be ample capacity for SMEs, with insurers looking to build their books within this perceived lower risk area of the market. Insurance rates are still dropping for SMEs and we are seeing significant competition.
For larger and more established companies the market is mature with less agencies/insurers targeting this part of the industry. The focus here remains on breadth of cover, longevity of the insurer, claims handling skills and proven expertise.
There are significantly more markets available when compared to a few years ago as well as good insurer interest which allows for some sector rate variation with smaller rates reductions for difficult to place construction areas such as structural and geotechnical engineers, Design and Construct (D&C), as well as certifiers and valuers (especially mortgage valuers).
We continue to urge caution when selecting an insurer as we feel that there is not enough premium in the current market pool to ensure insurer longevity once claims start to materialise, particularly with the newer entrants to the market.
One relatively new entrant, Everest, has recently left the market and we anticipate more will do so in the next 12 to 24 months. The construction industry remains under pressure and margins are tight. The national “need” for more homes continues to add pressure to a sector where builders are seeing smaller profit margins. History tells us that where margins are tight, insolvencies follow and build quality declines.
Insurer appetite for construction professionals risk is as follows:
We continue to see increased competition in all areas which is a welcome relief after so many years of the hard market.
Certain activities and disciplines are still of concern for insurers including:
- High rise residential
- Façades design
- Design and Construct (D&C)
- Certification
- Complex infrastructure projects.
Whilst there is reduced but sufficient capacity for those in the above disciplines, it remains vitally important for construction professionals to stand out from the crowd come renewal time. See our article on renewal strategy here.
We expect the return of the hard market sooner than most may expect – perhaps in the next 2 to 3 years.
Brisbane Olympics 2032
We are starting to see the Brisbane 2032 Olympics construction “need” impacting the supply chain and availability of tier one contractors. The construction clock is ticking, and the general market feeling is that construction will come down to the wire.
There is always great risk in fast tracked projects, as quality building works will likely take a backseat to speed of construction, which will inevitably lead to claims. Insurers are watching this space very carefully.
There is also pressure on the Project PI market with the Olympics and significant aggregation issues. Government and contractors are asking for lead consultants to obtain their own standalone Project PI policies with very high limits. Ordinarily, Project PI policies would be taken out by the project owner/Government. This “duplication” is causing issues in a Project PI market that is already under pressure.
D&C PI & principal-controlled PI insurance
Design & Construct professional indemnity remains a difficult area, however, there is still strong insurer appetite.
Principals are continuing to push the PI risk down to the D&C contractors’ PI insurance, even though relying solely on contractor arranged insurance presents risks for principals. Often contractors negotiate cover which is not favourable to the principal, and there may be limited or no cover if the contractor has breached its policy conditions or signed an agreement that breaches any contractually assumed liability exclusion in their PI policy.
Additionally, there always remains the possibility of the policy being eroded by claims brought by third parties other than the principal.
We recommend principals take out principal controlled professional indemnity insurance as a key part of a robust insurance programme.
Policy coverage and claims handling – beware the softening market
As we have seen in previous softening markets, the focus on market share and competition can have poor insurance policy outcomes for your business. New and returning insurers do not necessarily have the same level of market knowledge and experience as those who remained in the market and do not necessarily have the most appropriate policy coverage.
Similarly, they may not have the same level of experience in handling construction professionals’ PI claims, having been out of the market for some time.
Please see our recent article for exclusion clauses to be wary of.
Key issues
Some of the key issues at present include:
- Insolvencies continue to be an issue in this sector. Client selection and debtor vigilance remain fundamental to your business.
- In NSW, the new Engineers Registration Scheme is up and running, however, the new Practice Standard has been delayed again. Unfortunately, the Draft Building Bill NSW 2024, which consolidates 9 pieces of building and construction legislation is also delayed and remains “under review” by Government. The following articles provide further information:
Changes to registration for engineers scheme and fitness for purpose update
The one Bill to rule them all – Building Bill NSW 2024 - In Victoria, the Victorian Building Authority (VBA) has been superseded by a new regulator – the Building & Plumbing Commission (BPC). The BPC brings together regulation, dispute resolution and insurance into a single agency for the first time, making it easier for consumers and practitioners to access building and plumbing services and information. This transition will be made over the next 12 months. There have also been changes to the Security of Payments legislation in Victoria with the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill 2025 (Bill). The reforms are scheduled to take effect no later than 1 September 2026. Importantly, the amendments will generally apply retrospectively.
- PFAS continues to emerge as a new area of risk not just for those in the construction industry but other industries too. Safety in Design reports need to address this risk. For further information see our article here.
Continue reading our full range of market updates:
- Insurance Market Overview: January 2026
- Claims
- Workers Compensation
- Corporate and Multinational Risk
- Construction, Property and Development
- Financial Lines
