Construction insurance is a contingent claim set based on fixed payment in order to protect the interests of the parties involved in the construction project. The core function is designed to transfer certain the risks from the clients, contractors, subcontractors and the other parties involved in the construction project to insurers that provide contingent funding at difficult times. The construction (or engineering) insurance entails different types of policies and clauses that are designed to protect construction work risks as well as the erection & operation of machinery. Some of the key type of construction insurance activities builders risk insurance, commercial and contractor liability insurance, commercial auto insurance, inland marine insurance, contractor license bonds insurance, construction bonds, workers, compensation insurance and others.
According to study, “Global Construction Insurance Market to reach USD XX Billion by 2026” the key companies operating in the global construction insurance market are Allianz, ACE & Chubb, AIG, Zurich Insurance, Tokio Marine, Munich RE, XL group, Beazley, QBE, AXA. Both public and private stakeholders investing are considering the insurance in lines such as engineering, property, credit & surety, marine, energy and casualty. Moreover, there are wide scale opportunities for the niche insurance products covering, for instance, public non-payment, expropriation and political violence.
Based on the type, market is further bifurcated to property & casualty and professional liability. Based on the product type, market can be segmented into Erection All Risks (EAR), Contractors’ All Risks (CAR), Civil Engineering Completed Risks (CECR) and Advance Loss of Profits (ALOP). Moreover, based on the channel, market is segmented as Bancassurance, agency and direct & indirect channel.
The construction and insurance market is further driven by the increase in construction projects across the different geographies, followed by the rise in government spending over the construction sector. However, terms & conditions of contract insurance may further impact the overall market. Change in contractor behavior for optimizing the risk management spending across the developed nations. The strategic support by the insurance companies further creating the innovative risk transfer solutions, and is expected to boost the growth of contractor insurance market. Furthermore, the flexible contractor insurance product surging the contractors insurance market. However, terms & conditions of contract insurance are expected to restrain the growth of the contractor insurance market. The advent of technology and Smartphone’s has distracted driving to become another top concern for the constructing firms. The rise in significant loss factors by the contractors has shifted their focuses to behavior-based safety, frequently with the aid of the technology. Rise in construction activities have led to influencing by the external factors associated to (technical, design, logistics, physical, operating, environmental, socio-political, force majeure etc.) these factors are capable of not only diverting or decreasing the project speeds but can also to create irreparable aberration. Insurance support along with the risk management further led to a pivotal instrument that assists in dealing by the culling out of various risks, their analyses, and remedial steps which could be taken to avert over a particular project.
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Ankur Gupta, Head Marketing & Communications