Rates for construction lines of businesses including professional indemnity (PI) insurance “may soon stabilise” for insureds with well-presented risks, according to broker WTW.

WTW made the assessment in its latest construction update after observing most insurers in the Australian market finished last year on a positive note with their remediation strategies returning construction portfolios to positive territory.

“While rates and policy coverage for most clients are likely to stabilise this year, clients with adverse loss histories and projects in perceived high-risk sectors and/or geographical locations are likely to be the exception, with continued upward pressure on premiums,” Broking Director Construction Risks Mark Thompson said.

The broker forecasts premium rate increases of “flat to +30%” for the Design & Construct PI line this calendar year, noting insurers are showing “more interest” to underwrite the risk.

The forecast applies to annual, primary and excess rates.

“When we take a medium-term view, we see many insurers becoming more open to considering a broader range of [Design & Construct] PI risks,” Broking Director Construction Risks Mark Thompson told insuranceNEWS.com.au.

“We’re already seeing an increase in providing excess capacity and the stabilisation in primary rates, both of which are positive for this market.”

He says last year the broker predicted increases anywhere between 50% and 100%.

“So this year’s forecast is much lower for the majority of risks,” Mr Thompson said. “Of course, there will always be exceptions, particularly for poor loss histories.

“Does this mean we have seen the peak? All I can really say is I think we’re close to it.”

In other business lines, the broker projects “flat to +15% growth in premium rates (annual) for Contract Works – Material Damage this calendar year and “flat to +20%” (primary and excess) for Construction Third Party Liability.

“After several years of a hard market across all construction lines of insurance, rates and policy coverage requirements for clients with well-presented risks may soon stabilise,” Mr Thompson said.

“Their approach in the short to medium term will again focus on wording and coverage, including excess/deductible levels and capacity deployed.”

Click here for the report.