Hard market softening for construction sector, but inflation pressures still loom over insurance industry
14 März 2024 - 10:30AM
2024 marks a period of greater optimism for the construction
sector, as it moves away from the hard market cycle that’s been in
effect for many years, with global infrastructure construction
output set to grow at an annual average rate of 5.2% from 2024 to
2027. However inflation and interest rate uncertainty is still
impacting the insurance industry as a whole, after another record
year of catastrophic events in 2023. That’s according to the
Q1 Construction Rate Tracker from
WTW, a leading global advisory, broking and solutions company.
This year, activity and growth in the construction industry will
be led by large scale government spending and supported by private
investment in infrastructure, both aging and new, including roads,
railways, airports, ports, and urban mobility projects. Also in the
energy sector, predominantly in renewables, as populations continue
to grow at a fast pace and because of the need for accessible and
reliable energy supply and to comply with countries’
decarbonization plans.
Heavy investment in manufacturing is expected in the technology
sector with many projects expected to commence construction works
this year, including semiconductors, giga factories and datacenters
across various regions, but notably in North America, Latin America
and Europe.
Yet, construction activity is expected to retract in some
countries within Europe and Australia, due to the increased
construction costs for projects as a result of economic factors
including high inflation, elevated interest rates and labour
shortages.
Maria Sanchis, Global Head of Construction Broking, WTW, said
“While the prolonged period of inflation is easing, continued
uncertainty will cause moderate rate increases across most regions,
which can partly be attributed to consecutive insured losses,
amounting to $100 billion in 2023, which are becoming the norm
rather than the exception. Yet, expectations of flat rates and
slight discounts for “best in class” risks and clients are
indicated in some key territories.
Equally, well adopted strict technical underwriting criteria,
more predictable coverage and confident pricing adequacy will
likely lead towards an improvement in combined ratios and a stable
rate environment. However, rising claims costs will likely also
impact markets’ profitability particularly in key cost factors such
as healthcare, construction materials, workforce and litigation and
some insurers may struggle to maintain rates and perhaps not raise
pricing fast enough to cover record growth in expenses.”
About WTW
At WTW (NASDAQ: WTW), we provide data-driven, insight-led
solutions in the areas of people, risk and capital. Leveraging the
global view and local expertise of our colleagues serving 140
countries and markets, we help organizations sharpen their
strategy, enhance organizational resilience, motivate their
workforce and maximize performance.
Working shoulder to shoulder with our clients, we uncover
opportunities for sustainable success—and provide perspective that
moves you. Learn more at wtwco.com.
Media Contacts
Sarah BookerSarah.booker@wtwco.com / +44 (0)7917 722040
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