Overcapacity in the international construction, property /casualty markets in the first half of 2014 has resulted in rate reductions of up to 30% for commercial insurance buyers, according to Willis.
This is primarily driven by benign loss activity and softening conditions in the global reinsurance market, which is having a trickledown effect to the primary insurance market, according to Willis’s Q3 2014 Construction, Property & Casualty Market Review. Over and above rate reductions, corporate insurance buyers are also benefitting from an increase in available natural catastrophe capacity.
With no withdrawals of capacity from the construction market in the last six months, capacity is at an all-time high, according to the report. At the same time the volume of construction projects in many parts of the world has reduced, intensifying competition between carriers for premium volume and market share in the construction insurance market.