Broker WTW expects Australian construction premium rates to ease further as insurers shift their focus away from portfolio remediation and towards growth.

The “green shoots and improvements” of last year have continued, the broker’s first-quarter global construction rate report says of the Australian market.

“We expect this trend to continue into 2024. The outlook for 2024 is much more positive than in previous years, with insurers across all lines moving away from broad portfolio increases in rates and looking at clients on an individual risk basis,” the report said.

“Insurers have shifted their mindset from a position of remediating their portfolios back to profitability, to one of growth.

“The net result is increased competition in the market, whether that’s from insurers broadening their appetite for certain risks, renewed interest in Australian risks from the London and Asian markets, and with new capacity being established with insurers opening offices in Australia.”

Competition will lead to stabilisation or even downward pressure on rates, particularly for clients that can demonstrate good risk management, have a positive loss record and operate in areas that are deemed less risky.

Clients that are viewed positively can expect underwriters to review their risks more favourably and are in line for flat rates or small discounts.

WTW predicts rate movements of minus 5% to 10% for contractors all risk; minus 5% to 5% for construction liability (primary and excess); and minus 10% to 5% for design and construct professional indemnity (primary and excess).

However, some areas of the construction market remain challenging.

WTW says natural catastrophe-exposed, long linear civil risks, particularly projects in northern NSW and Queensland, renewable energy projects and tailing facility upgrades are likely to be seen differently by insurers.

In the general building market, water damage and ingress claims remain a focus.

“We’re seeing insurers looking at clients to introduce improved risk mitigation strategies such as installing leak detection systems during construction, and improved training and processes for staff in the event that there is a water issue,” the report said. “Clients that can demonstrate that they are managing these exposures are certainly being seen more favourably by insurers.”