Design & Construction Rate increases for the construction industry have moderated compared to prior years, with an average rate increase of 5.4% for all major lines of coverage according to the Council of Insurance Agents and Brokers. However, new tariffs pose significant and widespread implications for the sector, potentially causing project delays due to increased material and equipment costs. This also contributes to higher builder’s risk limits and increased automobile physical damage costs associated with more expensive imported goods.
Automobile The average annual Automobile rate increase was 8.9% in 2024, representing the 54th consecutive quarter of rate increases. This sustained upward trend is driven by persistent adverse loss rations, higher liability verdicts influenced by social inflation and the impact of third-party litigation funding. Furthermore, large fleets (over 500 power units) are facing restricted insurer capacity and higher rates due to reinsurance market conditions. General Liability Rates remain stable with low single-digit increases. Workers’ Compensation Rates remain stable with flat increases and no significant changes. Umbrella & Excess Liability Mirroring the trends in Auto Liability, Umbrella & Excess Liability layers experienced an average rate increase of 8.7% in Q4 2024. Insurers are maintaining restrictive capacity, often offering limits of $5 million or $10 million and increasingly utilizing quota-share arrangements with other insurers to provide coverage.
Contractor’s Professional & Pollution Liability Rates remain flat to +5%. However, more contracts are requiring higher insurance limits. Historically, a subcontractor may have only needed to provide $1 million limits to meet contract requirements. Today, depending on the scope of work, that same subcontractor may be required to provide $2 million, $3 million or even $5 million in limits. Property & Equipment Permanent Property & Equipment saw 5 to 7% rate increases due to the reinsurance costs of insurers, which are a result of recent catastrophic events. Builder’s Risk Frame construction continues to be a major challenge. Insurance underwriters require more detailed information about the project, schedule, site conditions and protective safeguards such as site security and water monitoring. Underwriters are imposing sub-limits for named windstorms in coastal areas and have pulled back on offering the LEG3 endorsement at full policy limits since two legal cases in 2024 affirmed coverage in favor of the insured. Additionally, extensions for builder’s risk policies continue to be habitual and problematic.
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