Brokerage, specialty insurer partner to offer additional coverage for construction sector
Brokerage, specialty insurer partner to offer additional coverage for construction sector | Insurance Business New Zealand
Construction & Engineering
Brokerage, specialty insurer partner to offer additional coverage for construction sector
Coverage will be based on companies’ ESG performance
Construction & Engineering
By
Abigail Adriatico
specialist insurer, to offer an additional professional indemnity (PI) cover to construction contractors based on their environmental, social, and governance (ESG) performance.
“ESG concerns are a growing area of scrutiny for the global construction sector, and financial institutions are looking to ESG performance as a marker of sustainable and resilient businesses,” said Kelly Looney, CEO, UK construction, infrastructure and surety, Marsh Specialty. “Despite their best efforts, many contractors are not always able to satisfactorily display their positive ESG goals in a way that allows them to obtain meaningful risk and insurance benefits.”
The additional capacity will be available to clients outside of the US that will complete Marsh’s ESG Risk Rating (ERR). The cover they will access will be based on their ERR score that met the threshold set by Marsh and Beazley.
“We are focused on supporting construction contractors that prioritise ESG. Companies that look after the environment, their communities and have strong governance are also likely to be successful in managing and mitigating their risk landscape,” said Andrew James, focus group leader, large client professional liability, Beazley.
Construction contractors who can meet the underwriting criteria can qualify for an additional $1 million in PI coverage if they score a six or higher on the ERR. This was 20% more on top of Beazley’s $5 million maximum line.
PI insurance protects contractors and subcontractors should claims be made against them in relation to alleged errors in professional activities, such as issues that may pertain to the UK’s Building Safety Act 2022 as well as cladding matters.
“A key role of a specialty insurer is to work with clients as they seek to improve their risk management and we are pleased that for construction contractors that perform well against ESG criteria, we are able to support their efforts by offering them additional capacity,” said James.
Marsh’s ERR, launched in March 2022, is an assessment tool that measures the ESG performance of an organisation. It allows the firm to identify the sustainability and climate-related risks and opportunities as well as gain access to additional insurance market capacity.
“As well as being able to access additional insurance market capacity for professional indemnity risks, our contractor clients can use the results of the ESG Risk Rating to identify their most critical sustainability and climate-related risks and build greater levels of transparency as they further develop their ESG strategies,” said Looney.
The ERR scores a client’s performance across 19 ESG themes as it is measured against more than 10 internationally recognised standards and frameworks published by leading organisations such as the Global Reporting Initiative, Sustainability Accounting Standards Board, Task Force on Climate-related Financial Disclosures, and the World Economic Forum.
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