UK Construction Insurance Market Update

The last few years have been difficult for the Construction industry which has faced disruption caused by the Covid 19 pandemic, and more recently supply chain impacts from Brexit and the war in Ukraine. The insurance market has also had to adjust over this period, with corrective action required to adjust unsustainably low historic premium rates and reflect claims cost inflation. Despite these challenges, in 2022 the construction insurance market has fared reasonably well and capacity is available.


There have been no recent withdrawals from the market in terms of insurers willing to write project and annual policies. In CAR and Liability rates have marginally increased only, after more abrupt increases in 2019 and 2020 with conditions such as deductibles being little altered.

Insurers have an increased focus on Combined Operating Ratios, a result of several high-profile fires in the last five years. As a result, there is reduced appetite for participation in lower layers of a liability tower, particularly at the £1 million attachment point. When insurers are deploying capacity at this level, they are limiting their exposure and looking to ventilate. As in other sectors, we have also seen a range of restrictions and exclusions creeping into coverage – from cyber to heat conditions, fraudulent claims clauses and a greater focus on PI writeback.

Despite recent rate increases, the long tail nature of CAR policies means that many insurers are still running off policies written during the end of the previous soft market – and are therefore yet to return to profitability. Despite this Insurers’ appetite remains good and insurers are keen to support client relationships as existing policies expire and they are faced with higher premiums. 

ESG factors are also firmly in focus with insurers expecting clients to demonstrate concrete plans to meet targets, rather than accepting ambitious-but-vague statements of ambition.


The PI market for Construction was much more challenging but hardened rate within a few years drew back the appetite of long standing existing insurers, as well as enticing new entrants into the market.

Significant concerns remain over claims related to the increased costs of remedial schemes to rectify cladding and fire safety defects due to non-compliance with building regulations at the time of construction. Further to the announcement of even more wide ranging changes proposed by the UK Government in the draft Building Safety Bill, including:

  • extending retrospectively the limitation period to 30 years for safety defect claims, a further extension of the 15 years previously proposed under sections 1 and 2A of the Defective Premises Act 1972
  • consultation with industry in relation to a plan of action to deal with and remediate unsafe cladding on buildings over 11m (not just 18m+)

There are concerns that if these points are enacted, there will be significant implications for the industry and, in turn, the insurers, both in terms of future costs, and also in terms of dealing with historic fire safety and other building safety issues. On top of this, is the worry among insurers that further substantial notifications may arise in this area.

The market is also showing signs of vigilance towards modern methods of construction (MMC), particularly as regards offsite prefabrication, which insurers are cautious about when it comes to underwriting exposure. Fears currently revolve around the speed and quality of such work, as well as potential exposure to systemic failures in prefabricated units requiring rectification on a mass scale.

Rate has levelled off in the PI market but insurers continue to be cautious on the capacity they are willing to deploy on any given risk, with clients expected to take more ‘skin in the game’ through higher levels of self-insured excesses or asking brokers to place co-insurance.

The cautious approach was further evidenced in the range of coverage restrictions that are becoming standard parts of policy wordings. Restricted cover or exclusions for both combustible cladding and fire safety claims are now the norm for UK construction firms. Absolute cyber exclusions have been mandated, following the identification of non-affirmative (also known as silent or unintended) cyber coverage as a threat to insurer solvency, with insurers citing claims for cyber events that had neither been underwritten nor charged for.

Meanwhile, some insurers are imposing manufacturing and transit clauses to exclude claims related to project delays caused by material or labour shortages, where the manufacturing or delivery of products is undertaken by a third party.


Property acquisition and brownfield development in a range of sectors – from domestic holiday parks to e-commerce distribution centres – is booming on the back of COVID-19 restrictions, pushing demand for EIL insurance. EIL insurers are experiencing significant growth in both volume of enquiries and Gross Written Premium (GWP). The increasing prominence of ESG concerns saw both investors and shareholders seek environmental risk protection, while moves toward Net Zero are driving investment in low-carbon energy projects (renewables, energy from waste).

EIL capacity was bolstered last year, with a number of market participants investing in their resources and offering. The only challenge to this is lack of expertise currently available.


At Lonmar Global Risks, our Casualty, Professions and Specialty teams have deep rooted knowledge in the Construction sector and market relationships to match. We strive to find solutions to the most challenges placements. In order for us to obtain the best terms please speak to us about a risk presentation.

Becky George, ACII Chartered Insurance Broker: Executive Director - Casualty | M: 07789983232 E:

David Doyle: Divisional Director - Casualty          M: 07919 992 798 | E:

David Bond: Executive Director – Professions | M: 07717 300923 | E:

Karen Allen: Managing Director – Casualty, Financial & Specialty | M: 07875 466 990     E: