We asked you about the challenges of broking in the construction sector. Here’s what you said…
Corporate construction and engineering business has declined for many brokers, our survey shows, with 33% of respondents saying that volume is down, and 50% saying that volume is flat. At the same time, most brokers, 75%, say that they haven’t seen any rate rises in the sector over the last quarter. These results are indicative of the wider decline in output by the construction sector.
Financial information services company Markit’s senior economist, Tim Moore, says: “While lots of projects are nearing completion, the concern is that there just isn’t enough demand to pull through any kind of recovery in the second half of the year. Within the sector, it’s been civil engineering that has been particularly weak, owing to the current lack of larger infrastructure projects.”
A significant majority of respondents to our survey, 76%, say that they believe the government’s recent announcement of large infrastructure funding schemes will have a long-term benefit for the industry, though 59% say that they do not expect the industry to gather pace over the next 12 months.
“The degree of positive sentiment about the year ahead just hasn’t recovered to its pre-recession levels,” adds Moore. “There’s a general air of caution. Construction output has fallen at its fastest rate since early 2010, and there are far fewer new orders. There’s a degree of inevitability with the bad weather and extra bank holiday, but the broad view is that it’s a very stark reminder of the underlying weakness in the sector at the moment. All the signs are pointing down.”
Respondents also indicate a degree of frustration with insurers, with 72% of brokers reporting that levels of service from the large composites writing corporate construction and engineering business is middling. Eleven per cent said the level of service was good, another 11% said the level of service was poor, and just 6% said that it was excellent.
Views from the brokers
Q: What is the biggest challenge for you as a broker in the corporate construction and engineering market and why?
‘Fewer construction projects, but an oversupply of underwriting capacity chasing rates far too low’
‘Finding an underwriter willing to think outside the box. Provincial underwriters generally have restricted authority’
‘Construction clients suffering from diminished workload and looking to save premium at all costs’
‘The ongoing recession and use of overseas companies on contracts’
‘Soft market, low demand, low rates and competition for growing accounts’
‘Understandably, price is the overriding factor when considering proposals from advisers, but not enough attention is given to added value’
‘Striking the balance between insurers’ pricing and clients’ pricing’