June 13, 2018 11:30
According to the latest study, sigma Swiss Re Institute, the new technologies may generate efficiency gains in the construction, but will also create new risks.
Insurance premiums for construction and technical risk to 2017 are estimated at 21 billion dollars ($ USD) american worldwide according to the report. This represents approximately 3% of the aggregate of the premiums for the risks of enterprises (730 G$ USD).
Growth of new technologies
Increasingly, the construction industry adopts technologies and digital processes, reports Swiss Re. The reinsurer also indicates that more than 400 companies by ConstrucTech technology (construction) have seen the light of day since 2009, raising$ 2.9 billion USD of funds. Most of them are specialized in tools for the management of construction projects.
Although these technologies increase the efficiency, the monitoring and enable better management of risk, they lead to other. “The technology also affects the nature of existing risks and brings a lot of new risks such as cyber. Insurers could be faced with an increase in the severity of claims, even if the frequency of incidents continues to decrease “, said the responsible of the writing property and specialty at Swiss Re, Mike Mitchell.
In a world increasingly connected, the insurance will be more asked to play a role in avoidance and risk mitigation, believes Swiss Re. The reinsurer added that a reconfiguration of the business models of insurers, construction and engineering risk is to be expected.
Deterioration in underwriting results
The study highlights the deterioration in underwriting results with a claims/premiums rising. Some sectors buildings and public works (BTP) have recorded an increase in claims. Swiss Re attributes this to the decrease in the level of quality control.
“The rate of premiums for insurance of construction and technical risks have been falling for more than a decade. It may be that the profit margins of some insurers, construction and technical risks are already so much under pressure that they fall below sustainable levels in the long term, ” says Mr Mitchell.
All in all, Swiss Re says that the outlook for the insurance of construction and technical risks are related to the growth prospective of the global economy. Urbanization, the replacement of aging infrastructure and the development of renewable energy sources should boost construction spending and the demand for insurance of construction and technical risks.