As Acrisure’s construction director for the West, Matt Honea (pictured) is seeing firsthand how the rules of engagement in the sector are being rewritten. He oversees a team of top construction advisors across 14 states, including high-risk markets like California, Arizona, and Washington, where carriers are grappling with social inflation, climate-driven losses, and mounting litigation.
“Auto insurance rates are experiencing upward pressure in many states, driven in part by the increasing size of liability verdicts” he said. “In the multifamily development sector, market volatility continues on project specific liability programs, largely due to the increasingly challenging landscape of construction defect litigation.” From a property insurance perspective, “wildfire losses in the West have adversely impacted market conditions for builders risk placements, with high value frame projects and sites with wildfire exposure being most impacted.”
Even before inflationary pressures and climate volatility created stress on insurance markets, writing construction coverage in the western US was difficult. Capacity was selective, terms were tightening, and underwriters were already cautious on large-frame and multifamily risks.
Now, Honea said, “it’s becoming more important than ever to partner with insurance advisors who understand evolving construction risks and are capable of providing the latest technology solutions, in addition to traditional insurance underwriting.”
For larger projects in particular, the structure of insurance programs is shifting as available capacity narrows.
“For projects over $10 million, we’re often using layered programs with excess and surplus (E&S) carriers, and we’re seeing fewer players willing to write that risk.” While admitted markets can still handle smaller, lower-value frame projects, higher-value builds require more creative structuring, sometimes incorporating AI-driven monitoring systems to secure better coverage terms.
One of the most effective levers in this environment has been technology deployed directly on site.
“The tech piece has been key,” Honea noted. “We’ve partnered with providers that install sensors for fire, water, or theft which are implemented in-tandem with insurance policies. That’s enabled us to negotiate higher limits and lower deductibles.”
On the liability side, construction defect (CD) claims are reshaping the development landscape across the West. Frequency and severity are both rising, but the legal and claims environment can look very different from one state to the next.
“The CD litigation environment varies between western states and working with a team who understands the factors applicable to a specific area has been an integral component of successful project delivery models.” Lengthy statutes for construction defect actions, combined with evolving court interpretations, have made it challenging for insurers to profitably underwrite construction risks in some areas. “There are fewer carriers, and less competition which means they can dictate terms,” he said. “We’re seeing more non-renewals, higher retentions, and narrower liability forms.”
The impact is particularly acute in for-sale residential developments, where trial activity is weighing heavily on both developers and insurers.
Class action lawsuits from trial attorneys are becoming increasingly common on for-sale residential developments, which adversely impacts insurance rates and terms for project specific liability coverage. Honea said, “Increased insurance costs have caused developers in some western states to steer clear of new condo or tract projects and shift their focus to apartments.”
While headline inflation and some material price spikes have stabilized, the aftershocks from COVID-era supply chain disruption and ongoing labor shortages are now surfacing elsewhere – especially in subcontractor performance and surety.
“We’re seeing more defaults among second-tier trades, those not directly contracted with the general contractor but still tied into the payment bond,” Honea said. “This has created issues for contractors working on municipal projects.” Because general contractors are ultimately responsible for payment bond claims, even indirect failures among lower-tier trades can trigger costly liabilities for the primary contractor.
“That second-tier electrician goes under, and suddenly the GC’s bond is on the hook,” Honea added. “It’s a cascading effect from broader economic stressors.”
Amid these pressures, Honea sees meaningful opportunity in how artificial intelligence can support more consistent risk management and contract compliance, particularly in areas that have traditionally been highly manual.
One of the most promising applications, he believes, is in policy compliance monitoring and subcontractor insurance verification.
“The reality is, many risk managers aren’t trained to interpret complex E&S policy language,” he said. “AI tools can now flag whether an endorsement meets the contract requirements, and frankly, they’re getting better results than people.”
Though these tools are still mostly used behind the scenes, Honea expects major brokerages to start offering them as client-facing solutions soon, turning AI from a back-office aid into a visible value-add for construction firms.
Looking ahead, Honea is not optimistic about a near-term turnaround in conditions, especially for for-sale residential projects, unless there are broader changes outside the insurance market itself. Without some evolution in regulatory and legal frameworks, he believes insurance placements will remain challenging for many construction developers and contractors.
“Litigation is one of the biggest blockers to solving the housing crisis,” he said. “Insurance is getting more expensive and less available. At some point, all the stakeholders, trial lawyers, insurers and developers will need to find common ground.”
In the meantime, Honea’s growth strategy for Acrisure’s construction division is rooted in value-added services that go beyond the policy itself – from claims advocacy and safety programs to legal education and technology integration – with the aim of helping clients navigate a tougher risk environment and build more resilient operations.
“Our construction clients shouldn’t see us as just brokers,” he said. “Oftentimes, the solutions we bring to the table are broader than traditional insurance offerings and we frequently support our clients’ payroll, 401K, and financial needs. Ultimately, we want our construction advisors to become as essential to a client as their CPA or legal counsel. That’s how we grow, by helping them succeed beyond insurance.”
