July 2024 Market Update – Contractors Plant & Equipment
Strong appetite remains within the Australian insurance market, with significant capacity for well managed mobile equipment fleets, with broad coverage and preferred rates available. Cranes and machinery used underground continue to attract higher rates, with fewer insurer options available, however, capacity returning from London has slowly led to more competitive pricing.
Investment in risk management remains a priority for policyholders. As well as reducing total claims and opportunities for recovery, underwriters do consider this when determining premiums. Examples of potential risk mitigators for plant and equipment operators and hirers are:
- GPS tracking and remote shut down technologies
- Front and rear facing cameras in road going units
- Operator training
- Equipment maintenance programmes
- Ensuring equipment is secured from theft or damage whilst not in use.
Inflationary pressures increasing claim costs continue to be a key driver for underwriters, however, considerations are made to overall fleet size and usage, as well as overall policy performance (claims) and the policyholders’ experience.
It remains imperative for policyholders to work closely with an appropriate risk advisor. Not merely for the negotiation and placement of the insurance programme, but to understand exposures and risks relevant specifically to them.
Market values and replacement costs have been affected by increased transportation costs, supply constraints and inflation. To prevent underinsurance, it is imperative that policyholders’ mobile plant and equipment sums insured accord with the policy basis of settlement. For further comfort, we recommend that policyholders engage an independent valuer to determine sums insured.
We suggest all clients focus on the following aspects of their mobile plant insurance programme:
- Ensure insurance valuations reflect the basis of settlement provided by the recommended policy wording
- Understand their hired in plant exposure
- With supply chain concerns still critical for any business, understand the impacts and considerations for indemnity periods and limits for increased cost of working and loss of revenue
- Environmental Factors i.e., use underground or in catastrophe prone areas
- Consider and explore alternative retention structures such as absorbing a higher excess or an ‘aggregate deductible’ structure.
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