Explore Amwins’ latest market insights on builders’ risk insurance. Discover trends, capacity changes, and pricing in the first half 2024.

Table of Contents

Market Overview: Builders Risk in 2024

The first half of 2024 has seen a dramatic shift in market conditions compared to the previous year.

Amwins has released its latest State of the Market report, highlighting significant trends and insights in the builder’s risk insurance sector.

With increased market capacity over the past 12 months, placements often need to be more subscribed, leading to a more competitive and flexible market landscape.

Capacity and Pricing Trends

Increased Capacity and Flexibility

The growth in Capacity, which began in late 2023, has continued into 2024.

Both new entrants and existing markets have increased their shares, resulting in more follow Capacity and fewer markets needed to fill out deals.

Brokers now have more leverage against carrier pushback, enabling them to secure better client terms and pricing.

Regional Challenges

While Capacity has generally increased, brokers still face challenges with CAT capacity.

Markets have limited their line size, particularly in regions like New York, Florida, and other coastal areas.

CAT risks continue to see sublimits on Named Windstorm (NWS), and high crime-score areas such as the Bay Area/Oakland, Portland, downtown Los Angeles, Nashville, and Phoenix are experiencing higher rates and deductibles.

Softening Market Conditions

Overall, greater Capacity combined with reduced demand due to fewer project starts has led to a softening market.

Rates have flattened, and markets have shown a notable aggressiveness to take on risk, including in the wood frame construction space.

However, new insurance carriers and Managing General Agents (MGAs) entering the space often need more long-term expertise, creating more price-ceiling pressure.

Economic Influences

Supply Chain and Labor Market

Supply chain issues have stabilized, but the labor market remains a challenge.

Worker shortages are causing project delays, often necessitating program extensions and changing terms. Inflation continues to impact insurance costs, particularly as project values increase during construction.

Despite these challenges, concerns in the builder’s risk space have lessened since 2022.

Interest Rates and Construction Activity

High interest rates continue to depress construction activity, especially among smaller developers.

Tier 1 developers, who can support higher rates through ongoing lease cash flow, remain more active.

Only when interest rates decrease will there likely be opportunities for Tier 2 and 3 developers.

Segment-Specific Insights

Wood Frame Construction

Recent fire losses in the wood frame space have yet to impact market appetite or pricing significantly.

The sector has seen an increase in non-CAT Capacity over the past 12-24 months, with large projects often oversubscribed during quoting.

This allows brokers to secure the best terms and demand follow-form coverage from upper layers.

Garden-style projects are seeing a notable softening rate, commonly available in the high 30-cent range.

Renovation Projects

Renovation projects remain challenging, especially when existing structure values exceed new work values.

New markets and products are aggressively targeting this space, though the frame and joisted masonry projects are still challenging and need to be completed. Comprehensive information and engineering reports are essential for negotiating existing structures and defect coverage.

Key Takeaways and Future Outlook

The increase in Capacity from new entrants benefits retail agents and buyers, likely leading to continued market softening.

However, established markets may need to adapt faster, often requiring pushback to secure competitive terms.

Retailers should focus on procuring detailed timelines, budgets, site plans, and soft-cost breakouts from insureds to obtain the best pricing structure.

Effective negotiation requires access to new and established carriers and building solid relationships with underwriters.

Amwins offers unparalleled market expertise, access to key players, and a data-centric approach to insurance placement, ensuring the best combination of rates, terms, and conditions for clients.

Contact Amwins

Contact your Amwins broker today for more information on how Amwins can help you navigate the evolving builders’ risk market.

Market Trends	Details
Increased Capacity	Both new and existing market players have increased their shares.
Regional Challenges	New York, Florida, and coastal areas face challenges with CAT capacity.
Softening Market	Greater capacity and reduced demand have flattened rates.
Labor Market Issues	Worker shortages are causing project delays and necessitating extensions.
Interest Rates Impact	High rates depress activity among smaller developers.