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Construction Market Update

Construction Article

 

Since 2018, the construction insurance market has undergone an acute change, transitioning firmly out of a very soft market. Entering 2020, contractors were prudent about their business prospects. But no one was prepared for the across-the-board disruption caused by the pandemic or the aftereffect that is likely to carry on well into a 2021 hardening market.

In the first quarter of 2020, we witnessed continued rate increases, requests for more information and risk management engagement, as well as increased deductibles, and some of the broad coverage of the past becoming much harder to obtain. This happened before COVID-19 really kicked in, at which point we all had to become accustomed to negotiating over the phone, or via various video conferencing platforms. It is fair to say that we have now entered a time in the insurance market that none of us has ever encountered before, nor want to see again, although we might need to get used to this for a while longer.

Like most other business sectors, the construction industry is looking with uncertainty at 2021 that will certainly continue to be affected by the ongoing pandemic as the virus mutates. Balancing opportunities with risks has always been the central challenge for contractors, Now, more than ever, the role of a broker is very important and construction companies need to partner with experienced brokers in order to ensure their story is pitched well to the insurance marketplace, pairing them with the right carriers, right-sizing coverage and tightly managing costs.

The economic shutdown delayed many projects that had been in the bidding or final stages. Significant material/supply chain disruptions jeopardized schedules and operations. Contractors also were hit when subcontractors couldn’t report to jobs, either because their people were exposed to the virus and subject to quarantines, or because they were unable to meet health guidelines.

Specific Areas of Concern

Residential Sector

As the market hardens, insurers are particularly cautious with any portfolio that has a poor claims experience or includes risks outside of their core underwriting appetite, resulting in increasing premium rates and restricting cover. Despite this, there is still a wide appetite to underwrite well risk-managed residential portfolios.

Water Damage

Water damage is a significant market concern. Insurers are keen to work with brokers to identify sites that perform poorly from a claims perspective. Many markets are encouraging clients to follow the advice in Managing Escape of Water Risk on Construction Sites, the guide issued by the Construction Insurance Risk Engineer Group.

Timber Frames and Cladding

It is fair to say that timber frame buildings continue to be a challenging area for the insurance market. The rates for timber frame buildings can be greater than those of a steel frame build, and policies can come with higher excesses. Following the Grenfell fire tragedy in June 2017, underwriters have been cautious about cladding. A greater understanding is sought of the full construction methods, with a focus on the composition and installation of cladding, particularly with projects that are more than 18 metres high.

Cyber risk – a growing concern

Following 2021 reinsurance treaty renewals all reinsurers have cyber cover exclusions, and as such there are a lot of processes that leave an open door to cyber risk. Many contractors buy policies where cyber is blended with their professional indemnity insurance. The protection offered by such policies might be limited versus a stand-alone cyber policy. Therefore, decoupling cyber for broader protections will also result in better terms and conditions. As cyberattacks are intensifying, especially during the Covid-19 crisis, the construction industry had not been spared. There’s been a notable uptick in cyber claims, and construction is particularly vulnerable to social engineering. This involves a cyber-criminal impersonating senior management or important vendors, using business email compromise tactics and effecting the release of large sums of money or information that can be monetized. To avoid the risk of a cyber-breach, firms should periodically undergo audits of their cybersecurity environments. An experienced broker can provide a great insight and guidance on cyber insurance policies making sure these are adequate for the business.

Contractors’ financial health under pressure

The industry is working with weakened balance sheets and compressed profit margins due to the pandemic’s impact. Many contractors had to cover unbudgeted labour costs as they tried to catch up on jobs delayed due to numerous virus-related reasons.

Contractors and subcontractors should count on their brokers to keep them on top of developments in the SDI and surety markets. Risk selection is another important factor in a hardening market as insurers tend to become choosier in whom they agree to insure. For subcontractors, it points out the need to self-market by sharing a good risk management track record with safety successes. For general contractors, it’s important (for any type of insurance) to demonstrate how quality, as much as safety, is managed on the job site. Quality has always been an important differentiator for contractors, and is now emerging as an important insurance underwriting (risk selection) factor as well.

Respecting the continuing risk of pandemic

As we’ve rolled into 2021, new virus mutations will constitute a continuing operational risk for the industry. The pandemic will continue to haunt supply chains as well, with knock-on effects impacting both budgets and schedules this year. Contractors are being reminded of the difference between an “efficient” supply chain and a “resilient” one.

The insurance industry will be hit hard by COVID-19 exposures, with the full extent of them not yet known by the industry.

Navigating the Market

In order to limit cost increases and improve risk profiles for their construction clients, retail brokers will need to look for the right wholesale broker that has ties with the Lloyd’s and London market and an excellent knowledge for the construction industry. Citynet Insurance Brokers has been established for over 20 years and their experience within the construction industry is an unparalleled one.

 

What can construction companies expect in 2021 

Whilst businesses and industries were impacted by COVID-19, some more than others, all had to adapt. Fortunately, construction was considered an essential business, so for the most part, the industry did well i­­­n 2020.

As the industry works to rebuild this year, insurance renewals are likely to be tough as underwriters consider stressed financials and other issues and trends that pose risks to the sector’s recovery, short and long-term.

Trying to forecast where rates will go this year is at best an educated guess. Every account is underwritten individually and ultimately pricing will be affected by risk control strategies and loss histories.

The challenges here will be heightened by a hardening insurance market, where rates trend higher as availability tightens. In this environment, contractors should expect their insurance brokers to be their partners and advisors in anticipating the risks ahead and shaping the strategies to manage them effectively.

 

Please download this article in a pdf format here.

 

Construction

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Seasons Greetings from Citynet and our office opening hours for the festive season.

 

Our office opening hours for the 2020 festive season are as follows:

  • 24th Dec (Christmas Eve) – 9am – 1pm
  • 25th Dec (Christmas Day) – closed
  • 26th – 27th Dec – closed
  • 28th Dec – closed
  • 29th Dec – normal working hours
  • 30th Dec – normal working hours
  • 31st Dec (New Year’s Eve) – 9am – 1pm
  • 1st – 3rd Jan 2021 – closed
  • 4th Jan 2021 – normal working hours

 

We wish you a safe and Happy Christmas and hopefully, the New Year will bring back the normality we all crave for! 

 

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CITYNET APPOINTS INDUSTRY VETERAN TO ITS MOTOR TEAM

Simon-Fitter

Citynet Insurance Brokers has appointed Simon Fitter as an Account Executive within its growing motor fleet operation.

Simon has been involved in the motor insurance industry since 1985 and was originally an Underwriter at Paladin Motor Policies before moving on to hold senior underwriting positions at Brit, Markel, and Newline. Since 2013 he was Head of Motor for Direct Insurance London Markets (DILM)

The biggest change I have witnessed in the Motor Fleet sector throughout my career, has been the demise of Lloyd’s Syndicates, the rise of MGA’s and the dominance of company markets which we have had to adapt to,” said Simon. “Challenges that brokers have faced in recent years, have been keeping up with the changing markets, their capacity and business appetite to name but a few, however, as long as we maintain and develop relationships and have a clear understanding of their product this can be overcome. On this note, I am extremely excited to join Citynet’s team and help develop further their fleet account.”

Citynet’s motor fleet division has grown dramatically in recent years. The exceptionally strong relationships with the carriers and the very broad market access have made us one of the leading fleet wholesalers in the London market.

Andrew Walsh, Managing Director commented, “I have known Simon for a long time, and I am acutely aware of his ability. He made the transition from a Lloyd’s Box Underwriter to full-time broker look easy and has quickly become one of the motor markets most respected individuals. 

This is the strongest motor team that I have been involved with, a bold statement when you consider that my 20 years plus experience has been spent working within wholesale brokers who specialise in this class. Our growth across the business is almost exclusively due to our ability to negotiate in the London motor market, an even greater achievement when you consider that we still represent far fewer UK retailers when compared to our competitors. 

We are fast becoming the broker of choice when it comes to placing motor business and I expect that Citynet will be market-leading in this class over the years to come.”

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Lloyd’s proposed transfer of certain EEA insurance business to Lloyd’s Brussels

Lloyds of London

 

Lloyd’s is proposing to transfer certain EEA insurance policies to Lloyd’s Brussels. The proposed transfer will not change terms and conditions of any policy, except that Lloyd’s Brussels will become the insurer and Data Controller in respect of the transferred policies. Further information about the proposal (including whether it could affect your pre-transfer position), which policies are transferring, your rights and what you need to do can be found at  lloyds.com/brexittransfer

 

Should you have any queries please contact Mark Crisp at mark.crisp@citynet.eu.com or call 020 7488 6708

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New Facility Available

 

Here at Citynet, we understand the difficulties your clients are going through during these unprecedented times.

Behind the scenes, we have been working hard with our existing insurers to manage your clients’ insurance requirements, as well as continuing to explore new markets.

Citynet Insurance Brokers are pleased to confirm that we can now offer insurance solutions in partnership with Convex under our new facilities. Convex was launched to the market last year with $1.7bn of initial committed capital to underwrite insurance for complex specialty risks.

The company, set up by Stephen Catlin and Paul Brand, has an A.M. Best rating of A- (Excellent).

Citynet has long-standing relationships with the underwriters who have recently joined Convex, which allows our team of brokers to negotiate the best possible deals for your clients. Citynet and Convex can provide insurance solutions for your clients within the Construction, Entertainment/Leisure, Manufacturing, Engineering, and Transportation industries, amongst many more.

Here at Citynet, we more than fully understand your clients’ needs and provide you with the specialist knowledge and expertise you need, when you need it.

Matt Carlick Broking Director Citynet

For more information about our New Facility, please contact our Broking Director – Matt Carlick by using the below contact details: 

07890 545 417
matthew.carlick@citynet.eu.com

 

 

 

 

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Citynet’s annual BIBA networking event is now being cancelled!

 

Since the Coronavirus outbreak forced the UK into a series of measures centred around social distancing and limiting the gathering of large groups – it is now official: the British Insurance Brokers’ Association (BIBA) has announced the cancellation of its annual conference, which was due to take place on 13 -14 May in Manchester.

In a statement issued yesterday, the Association noted that it looked forward to seeing everyone “at BIBA 2021,” indicating that the event was being cancelled outright for this year rather than being postponed.

In light of these changes, and the latest Coronavirus developments, we are sad to inform you that our BIBA Networking event at The Rain Bar in Manchester is now being cancelled for this year.

Please accept our apologies for any inconvenience this has caused but the wellbeing of everyone takes priority in these extraordinary circumstances.

Thank you for your understanding.

Take care of yourself and yours!

Kind regards,

Citynet Insurance Brokers

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Motor fleet schemes update

MOTOR FLEET SCHEMES

ARE YOU HAVING PROBLEMS WITH PLACING YOUR CLIENTS’ MOTOR BUSINESS?

In these unprecedented times, we need to find a bit of normality whilst we adapt to these extreme circumstances.

Citynet Insurance Brokers are still open for business and would like to keep you updated on the latest developments within its Motor Fleet Schemes Division.

We tailor bespoke solutions for your clients’ Motor Fleet needs.

COURIER MOTOR BUSINESS

  • Any Licensed Drivers
  • No residency clause
  • Extended cover for all in-vehicle technology
  • Extended trailer cover
  • Including “Tool of the Trade” cover
  • Extended cover for vehicle Livery/Signwriting
  • Automatic inclusion for drivers with convictions, subject to £250 excess and those with suspensions subject to £500 excess
  • Built-in automatic bonus for good performance
  • Long Term Agreements Available

 

ARE YOU HAVING TROUBLE PLACING ‘WORKING VEHICLES’ REQUIRING

‘TOOL OF THE TRADE’ COVER?

Citynet has got the solution for you and your clients. 
Click here!

 

MOTOR SCHEMES SPECIALIST KNOW-HOW!

If you have Motor Fleets with vehicles that are involved in Loading, Unloading, Shredding, Lifting, Mixing, Tipping from Cement Mixers, Cherry Pickers, Cranes to Tippers, etc. you guessed it…WE HAVE A SOLUTION!

Covers include but are not limited to:

  • Any Licensed Drivers
  • Extended cover for all in-vehicle technology
  • Extended trailer cover which includes fitted machinery, plant and forklifts
  • Including “Tool of the Trade” cover
  • Including Third Party cover for Solidification, Contamination, Spillage and Pollution, subject to £1,000 excess
  • Automatic inclusion for drivers with convictions, subject to £250 excess and those with suspensions subject to £500 excess
  • Includes Tipping and Toppling incidents
  • Extended cover for all in-vehicle technology
  • Extended cover for vehicle Livery/Signwriting
  • Includes full cover whilst the vehicle or trailer is being used as a “Tool of the Trade” and requires the keys in the ignition for operation
  • Includes Goods in Transit cover for Cement Mixers and Batching units and extending to incorporate Solidification of load
  • Built-in automatic bonus for good performance
  • Long Term Agreements Available

 

Please send your enquiries to motorschemes@citynet.eu.com

or call us direct on 07766 314 968

Additionally, if we can help you on a package basis, please feel free to show us all the other covers.

We look forward to helping you place your clients’ business.

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Coronavirus – Citynet Business Continuity Plan

 

Whilst we are all naturally concerned over the ever growing spread of the Coronavirus, it is of huge importance to us that we are able to fulfil our commitment to you and your policyholders in delivering you with a first-class service.

Our London Market operation has a business continuity plan in place that enables our people to operate from anywhere in the UK by remotely accessing all systems, files, enquiries and communications.

The London Insurance Markets response to this issue varies from Insurer to Insurer but like ourselves, they possess the technology that enables them to bind cover, respond to enquiries and transact their day-to-day business without interruption.

In the unlikely event that your usual day to day contact has to self-isolate, you will receive further communication from us that will direct you to one of our many account executives or handlers that will be ready to assist you with your enquiries or administrative queries.

A copy of this communication will be published on our website which I would encourage you to visit at www.citynet.eu.com, giving you an opportunity to acquaint yourself with the Citynet team and the suite of services that we can offer you and your clients.

Our combined London Market team is one of the largest in the UK Wholesale environment, giving you the comfort that we are capable of looking after your policyholders in the event of a crisis.

 

Kind regards,

Andrew M Walsh
Managing Director

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Building broker business in the construction insurance sector

Citynet-Construction insurance sector

In the midst of chaos, there is opportunity!

The famous quote from Sun Tzu in The Art of War may not have been intended for the insurance industry – but it is one that stands applicable especially now in relation to the construction sector where the building blocks appear to be crumbling. The July 2019 IHIS Markit construction purchasing managers’ index dropped to its lowest levels since April 2009.

“According to the latest survey of industry executives, the UK construction sector is suffering a loss of momentum, led by the sharpest reduction in new work since March 2009,” Matt Carlick, Broking Director at Citynet Insurance Brokers, told Insurance Business. “As the market tightens, some insurers are looking into decreasing the number of brokers they do business with.”

At the heart of the problem appears to be a shortage of skilled workers, leading to greater use of LOSC and BFSC contractors, according to Carlick.

“Greater use of lower-skilled or non-skilled workers who tend to be less experienced in a particular trade or are new to a company and therefore less aware of the H&S culture of an insured,” he said. “Due to a skilled worker shortage, there is a danger that the cost for these employees increases which can negatively affect profit margins and therefore the funds available for investment in H&S initiatives.”

Amid the clouds, however, there are plenty of silver linings – and savvy brokers have plenty of opportunities to be the cement that keeps businesses watertight amid the onset of economic bad weather.

“Despite the comments about retrenchment in the UK construction sector, underwriters would suggest that they are seeing small organic growth for London and South East based risks,” added Carlick. “This also means an increase in estimates for LOSC and BFSC payments which bring their own insurance issues with them.”

“Of course, there are concerns about the current business outlook and these are overwhelmingly attributed to domestic political uncertainty,” continued Carlick. “The construction sector hasn’t been left unaffected by this current climate. Rising risk aversion and tighter budget setting by contractors in response to Brexit uncertainty can hold back activity, especially in the commercial sub-sector.

“The key is to work with a specialist – and, as wholesale brokers, Citynet has a proven ability to build and maintain relationships with underwriters which is essential to ensuring that the best deal is on the table for our retail broker clients.”

Finding the best deal also means finding the right policy for clients. While each business will have different individual needs, Carlick believes there are certain important areas of a construction policy that every broker should look for.

“Important areas of a construction policy include cover for asbestos; attitude towards criminal defence costs; height and depth limits – ideally there should be none; cover for hazardous locations/activities; attitude towards rehabilitation; insurers’ flexibility to be able to deal with mid-term amendments which are hazardous and/or unusual,” he said.

Above all, however, it’s about finding a trusted partner, Carlick believes – one that has “its’ fingers on the pulse of this dynamic market” and “strong market relationships.”

 

Source: Insurance Business UK

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Winners at BIBA 2019!

BIBA_post_event_2

 

#BIBA2019 – VENI…VIDI…VICI! 

It is true to say we’ve had a fantastic couple of days at the largest networking event for the insurance industry – #BIBA2019. Even the sun has made an appearance in Manchester, a city that is known for its rain…

The BIBA conference is an essential part of Citynet’s annual event calendar where existing and new clients all come together in one place and our amazing team has the opportunity to build on existing relationships and forge new ones.

To everyone who has visited our stand at #BIBA2019 we would like to say THANK YOU and to those of you who did not have the time to come and talk to us, please get in touch to see how we can be of help to you.

Thanks again to all of you for making #BIBA an unforgettable event!

 

Who are the prize winners?

We are delighted to announce the winners of our three prizes.

 

— 1st Prize – An Apple Watch goes to Ms. Michelle Ramsey from Cowens.

— 2nd Prize – A Bottle of Dom Perignon Champagne goes to Mr. Sean McDonagh from Tony McDonagh & Co Ltd.

— 3rd Prize – An Amazon Echo Dot Third Gen goes to Mr. Mark Dacre from Ives and Taylor.

HUGE CONGRATULATIONS FROM ALL OF US AT CITYNET!

Richard_Scott_Citynet Citynet_BIBA
  Citynet_BIBA Citynet_BIBA
Citynet_BIBA Citynet_BIBA
Citynet_BIBA Citynet_BIBA

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