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Construction Drives Specialty Casualty Market

Tim McAuliffe - President, Specialty Casualty

Specialty casualty line’s growth has been driven by the economic recovery, especially within commercial construction. Construction risk represents sector-specific developing opportunities for global companies with competitive appetite and capacity for complex claims management. Commercial construction ranked at the top of the 10 fastest growing sectors in the U.S. On a global basis, construction projects are being undertaken as a deliberate investment strategy to boost in-country economies and stimulate GDP.

Construction starts are forecasted to rise 9 percent from 2014 to reach $612 billion in total value by year-end 2015, a larger gain than the 5 percent increase experienced in 2014. Non-residential, commercial construction spending is on track to signal the highest growth outlook since 2008. Double digit growth forecast in the commercial market for 2015 is expected to be sustainable throughout 2016, led by office buildings, hotel properties and manufacturing projects.    

Infrastructure investment projects will dominate construction revitalization, to encompass railways, water management, electric grids and more. McKinsey Global Institute reported that “projected global GDP growth will require an estimated $57 trillion in infrastructure investment by 2030,” representing a 60 percent increase in construction spending over the past 20 years.

The American Recovery & Reinvestment Act is committing $787 billion to the U.S. economy, of which $150 billion will be dedicated to aging infrastructure projects. The U.K. Investment Plan, a public/private partnership, has earmarked nearly £315 billion in the next three years for infrastructure investment. China has declared its intention to accelerate large capital infrastructure projects valued at approximately $1 trillion from 2014-2016 to boost GDP.

Specialty casualty carriers with a full stable of capabilities can generate performance gains in
expectation of heightened construction sector demand. Anticipated market outlook will require a focused dedication to underwriting discipline and necessary capacity, positioning companies to be responsive to brokers and clients in this dynamic environment.

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