According to the U.S. Casualty Market Outlook: Mid-Year 2021 report, while low-risk accounts are seeing some relief on the General Liability (GL) side, Excess Liability insurance in some cases is still experiencing double-digit increases well into 2021, particularly if an account has had losses, and for accounts with a large auto exposure, habitational construction risks and/or street/road construction.
Utilization of Auto Buffer Placements More Commonplace
"Many carriers are requiring higher GL limits and an Auto attachment of $2M, $5M or more," said Sarah Wirtz, RPS Area Senior Vice President/Casualty Manager, National Environmental Practice Leader.
The Excess side is no different when it comes to construction auto exposures. "A lot of carriers are competitive on the primary package, but on a supportive Excess basis they're looking for a $2M Auto attachment," noted Russ Stein, RPS Senior Vice President. "In these instances, we will place $1M on the primary with a $2M attachment on Excess for the Auto placement. The standard carrier will write the GL, Auto and Workers' Comp with only $1M on the primary Auto; and the lead Excess for $10M, with a $2M attachment for the auto exposure. This is being done, for example, for civil contractors and paving and grading contractors with larger auto fleets, with a vehicle breakout significantly shifted toward heavy and extra heavy units," said Stein.
Building Excess Towers
Carriers are also opting to offer reduced limits on the Excess as well, particularly in the E&S space.
"Where you once saw $25M limits, you are now getting $10M or $5M, as well as the need for more carriers to participate in the tower, depending on the exposure and class," said Brian Permenter, RPS Area Vice President, National Construction Leader.
New York Construction
The Casualty market in New York Construction for mid-year 2021 continued to remain firm with losses driving up rate pressure. Capacity remains limited for the GL and even more so on the Excess layers.
"There aren't many markets that will write $5M on a lead account and, if they do, they're employing stringent underwriting requirements," explained Antoinette Sacchi, RPS Area Vice President. "Most carriers require five to seven years of loss runs."
Renewal shopping is the norm, again particularly for those accounts with significant losses.
"Some insureds are even struggling to get insurance, which wasn't originally contemplated in their job bids," Sacchi said. "There is a limited pool of carriers willing to write in New York because of its Labor Laws, which place absolute liability on the employer as well as the owner and general contractor."
Going to Market
When going to market, be sure to have a clear understanding of each account and its loss history and how an insured can mitigate claims going forward. Try and get a read from carriers 90 days ahead of renewal to see where they stand on pricing and capacity and provide underwriters with as much information as possible for favorable outcomes.
To learn more about the unpredictability of the Excess Market and its impact on the Construction industry, download the U.S. Casualty Market Outlook: Mid-Year 2021.