Australia’s construction insurance market has entered a markedly softer phase in 2025, with premiums falling across most lines and insurers competing aggressively for business.
According to Marsh’s Construction Insurance Market Update 2025, premium reductions averaged between 5 and 15% in the first half of the year, a sharp turnaround from the upward trajectory that dominated much of 2024. Contract works insurance saw an average 5% decrease, while design and construction professional indemnity fell by about 10%.
This is a big difference from Marsh’s 2024 analysis, when insurers were still pressing for premium increases and applying tighter conditions in response to loss experience and capacity constraints.
The softening has been driven by increased capacity and new entrants since 2024, intensifying competition and offering clients greater choice. Construction liability insurers, for example, have doubled their available primary capacity from $25 million to $50 million in many cases. Incumbent insurers, keen to avoid remarketing at renewal, have offered discounts and long-term agreements with built-in concessions.
The report also highlights a return of follow-form clauses across co-insurance programs, giving insureds greater clarity and consistency. For smaller and mid-sized contractors, this has translated into broader coverage at lower prices, while even tier-one builders have secured rate reductions of up to 10%.
Despite the softer pricing, Marsh notes that insurers are maintaining rigorous underwriting standards. Risk engineers are being deployed more frequently to assess complex or high-value projects, extending placement timelines but ensuring more accurate pricing. Insurers remain particularly cautious on accounts with deteriorating claims experience and on portfolios exposed to natural catastrophes.
Claims inflation has also emerged as a point of tension. Marsh reports that disputes over reinstatement costs have delayed settlements, with insurers scrutinising supplier cost increases. Greater involvement of insurer-appointed law firms has further slowed the claims process.
Looking ahead, Marsh expects competition to persist through the second half of 2025. While insureds are well positioned to optimise terms, the broker stresses that success will depend on the quality of submissions. Well-structured data, coupled with demonstrable risk management around site safety, project timelines and contractual allocation, will remain crucial differentiators.
The 2024 report underscored a market still grappling with post-pandemic volatility, elevated loss ratios and restricted capacity. The rapid shift to a buyer’s market in 2025 illustrates how quickly conditions can change – and how construction firms with disciplined renewal strategies can take advantage of these swings.
The construction insurance market in Australia remains concentrated among a small group of major carriers, though appetite differs depending on the class of business. In the contract works space, Allianz, QBE, Zurich, Liberty Specialty Markets, HDI Global and Chubb continue to provide the bulk of capacity for both annual programmes and project-specific placements, with Lloyd’s syndicates stepping in for large or highly complex projects.
Liability placements are similarly dominated by Allianz, QBE, Zurich and Liberty, with AIG and Berkshire Hathaway Specialty Insurance also playing important roles. While overall capacity has remained steady, underwriters’ willingness to participate still varies according to contractor size and project risk.
The professional indemnity market, by contrast, is served by a narrower set of insurers. Liberty, Allianz and HDI Global are among the most consistent providers, with support from selected Lloyd’s markets on a facultative basis. Marsh notes that some carriers have been reducing their exposure to higher-risk professions, particularly those with significant design responsibilities, keeping rates firm in this segment.
Taken together, Allianz, QBE, Zurich, Liberty and HDI form the core of the Australian construction insurance market, while Chubb, AIG, Berkshire Hathaway Specialty and Lloyd’s underwriters add targeted capacity across different lines. This concentration of capacity underscores the importance for contractors and brokers of maintaining strong relationships with a limited pool of providers.
