CONTRACT WORKS CASE STUDY
A builder's annual contract works renewal came back with a large mid-term adjustment and a much higher projection. They wanted a second look at the open market before committing.
Premiums and outcomes described are specific to this client and indicative only. Your own terms will depend on your circumstances and the insurer.
A Sydney building and construction company came to us about their annual contract works policy. Their work was roughly 95% new construction and 5% alterations, mostly metro with some regional projects, and the occasional basement excavation.
Their renewal had come back materially higher than the prior year, with a mid-term adjustment still outstanding pending financials and a projection built on a higher revenue figure. They wanted to test the open market before committing.
We built a clear picture of the business - the construction-to-alteration split, the metro and regional spread, and the limited excavation work - and took it to specialist construction markets.
An annual policy is priced on turnover, so getting the projection and activity split right was central to getting workable terms.
The hardest part was the gap between what the renewal projection assumed and where the business actually sat. A higher revenue projection lifts an annual contract works premium quickly, so we had to make sure the figure being quoted reflected reality.
Construction risk also narrows the field. Annual builder's policies with excavation exposure sit with a smaller group of specialist markets, so a wide, well-presented submission was important to surface competitive terms.
We placed comprehensive annual contract works cover through Hutch, who have a construction arm and in this case were able to offer competitive terms.
Final Solution: An annual contract works policy placed through Hutch at a premium of approximately $25,700.
The client got cover across their projects for the year without the open-ended adjustment hanging over them, and a clear basis for the premium.
This case shows the value of testing the market at renewal. When a renewal comes back higher, a broker who can test the wider market can tell you whether better terms are available.
If your annual contract works renewal has jumped, we can take your risk to specialist construction markets and tell you whether better terms are out there.
