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2023 Coastal Builders Risk Market: What You Need to Know

February 10, 2022

Within the last three years, you've probably noticed the builders' risk market for coastal & Louisiana risks has turned on its head. In Louisiana alone, over 20 insurance companies have gone under or withdrawn from the state forcing premiums to increase.


"I've recently been told coastal Louisiana is probably the hardest area in the country to get wind coverage, especially for framed construction projects." - Jess King, Construction Team Leader


Where are we now, and how did we get here?

In 2022, Hurricane Ian (one of the costliest hurricanes ever) and Hurricane Nicole (a late-year hurricane that made landfall) had the Builders Risk marketplace on edge.

There were 18 weather/climate disaster events with losses exceeding $1 billion each to affect the United States.

These events included one drought event, one flooding event, 11 severe storm events, three tropical cyclone events, one wildfire event, and one winter storm event.

Overall, these events resulted in the deaths of 474 people and had significant economic effects on the areas impacted. The 1980–2022 annual average is 7.9 events (CPI-adjusted); the yearly average for the most recent five years (2018–2022) is 17.8 events (CPI-adjusted).


Insurers are grappling with the decreased supply and increased demand for reinsurance, with global dedicated reinsurance capacity reduced by over $40 billion in the past year alone.

With minimal new meaningful capacity entering the market from either the insurance or reinsurance side, insurers entrenched within strict underwriting guidelines, and continued scrutiny on underwriting data provided, 2023 may be the most difficult builders risk season yet.

Rate Predictions:

Product Line

Year-End 2022

Forecast 2023 (First Half)

Non-CAT Property w/ Minimal Loss History & Good Risk Quality

Up 5% to 10%

Up 5% to 10%

CAT Property w/ Minimal Loss History & Good Risk Quality

Up 15% to 50%

Up 15% to 50%

CAT or Non-CAT Property w/ Poor Loss History or Poor Risk Quality

Up 25% to 150%

Up 25% to 150%

In addition, underwriting criteria have become more strict. Markets are demanding more detailed information about projects and more active mitigation measures to combat fires & water damage.

Deductibles have increased, particularly for water damage and convective storms in hail-prone areas.

What sort of coverage changes can I expect in 2023?

Carriers seek higher deductibles to manage risk and motivate project owners to take enhanced risk mitigation measures.

Deductibles for water damage are still trending higher, with some ranging from $100,000 to $250,000 on specific c projects.

Markets are also pushing wind and hail deductibles, particularly in the hail belt, where percentage deductibles are becoming more common.

Carriers are more actively modeling both convective storms and wildfire risks. Instead of a flat deductible in hail-exposed areas, carriers may seek 1% or 2%.

For coastal exposures, deductibles are moving from 3% toward 5% for named wind.

All Other Perils (AOP) deductibles have risen on larger projects as carriers seek to stem attritional losses. Builders should prepare to bear more risk overall.

If I am a project owner or contractor, what can I do?

Communication about project status and potential delays is crucial between the contractor, retailer, wholesaler, and carrier.

Project owners should be transparent about financing status and be realistic about the time securing financing will require to come to the insurance markets when they are ready to buy. If financing is delayed, quotes obtained earlier may no longer be valid.

While extensions are not typically negotiated more than 30 days before expiration, carriers are reluctant to offer extensions on current or expiring builders' risk.

Some carriers have exited the marketplace (standard and E&S), and that lost capacity must be replaced.

Any new carrier will rate back to inception because they're exposed on day one of the risks; therefore, underwriters will have questions, and applications may be required. Some carriers are questioning the value of projects that started 2+ years ago.

This means project owners should set reasonable deadlines that acknowledge potential delays related to labor availability and supply chain snags from the beginning.

Ultimately, it's better to plan for uncertainties & ensure the coverage can accommodate potential delays, even if there is an additional up-front cost.

Assembling the right insurance program is critical for completing a project in the current environment.

Contact Ross & Yerger today to learn more about how we can help navigate these challenges and protect your project & income.


Jess King Commercial Lines Client Manager / Construction Team Leader jessking@rossandyerger.com


Jess King is a Commercial Lines Client Manager & Team Leader. He is also the Ross & Yerger Construction Team Leader.


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