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Overcapacity creates buyers’ market

Overcapacity in the international construction, property and casualty markets this year has prompted rate reductions of up to 30% for commercial insurance buyers, according to a Willis report.

The global risk adviser and broker says capacity in the construction market is at an all-time high.

However, the number of construction projects in many parts of the world has fallen, intensifying competition for premium volume and market share in the insurance market.

In the general property market premium rates are continuing to drop by 10-15% on claim-free business.

“Even larger reductions are available for buyers who can clearly demonstrate robust risk management practices and detailed risk information,” Willis says.

Head of Broking and Industry Practice Groups for Construction, Property and Casualty James Nicholson says soft market conditions are likely to continue, but “without necessarily threatening [insurers’] profitability and solvency… provided they actively manage their portfolios”.