An influx of high-quality capacity into the Australian construction market is expected to continue through the second half and into next year, WTW says in a report.

The new capacity has led to the highest level of choice for construction clients since 2019, resulting in favourable renewal and project placement outcomes, with insurers described as being in growth mode while maintaining rigorous underwriting standards.

“All indicators point to a positive market outlook as we finalise the year,” Australia and New Zealand head of construction Iain Drennan said. “The resilience of the construction insurance market continues to impress in the face of persistent economic headwinds, and contractors are finding innovative ways to manage risk.”

The broker says clients with well-presented risks, a strong loss history, effective internal risk controls and a clearly articulated business strategy will find increasingly good opportunities in the market.

In the construction all risk category, rating increases have slowed and terms and conditions have remained consistent. The market has had renewed interest from London-based insurers, new entrants establishing themselves in Australia and former players returning. 

The increased interest spans the mid-market and large segments, with some difficult pockets remaining.

“Projects in areas prone to natural catastrophes, such as certain civil projects, solar energy ventures, mining operations and high-rise residential developments, continue to face challenges due to their elevated risk exposures,” WTW says.

Third-party liability has also shown a “marked improvement”, but with challenges for worker-to-worker and contractor injury claims, while design and construction professional indemnity has benefited from new capacity mainly focused on primary business rather than excess positions. 

“This shift is putting pressure on established markets to protect their portfolios, which have been under careful remediation for the past three years,” the report says.

The Global Construction Rate Trend Report says the international industry is in line for growth, driven by energy, utilities and infrastructure projects.