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As contractors see double-digit increases in Excess coverage, these insights suggest ways to manage costs and risks.


The term “nuclear verdict” was coined to describe jury awards in excess of $10 million. Now, however, that figure has the potential to become a fraction of the sums awarded in some lawsuits. One case in particular made headlines in autumn 2020 when the jury handed down a verdict that granted the plaintiff more than $411 million.

Once we enter an era in which awards can come that close to a half-billion dollars, “nuclear” begins to seem like an inadequate description. If this trajectory continues, there is a risk of moving from nuclear to a full-on meltdown.

The trend is already having an impact on contractors for its role in driving high-double-digit increases in Excess coverage. But there are actions the industry and its insurers can take together to mitigate these emerging risks and manage their costs.

Double-digit increases
The excess marketplace has, across the board, been in a hard market since the fourth quarter of 2019, which followed a long period of being average to below average. For perspective, it’s worth noting that the last hard market occurred in the period preceding the September 11 attacks, which precipitated a softening of the market that continued until late 2019.

During that soft market, there were in certain segments drops in access book rates by 40–50 percent over the course of five or six years. Those rates then rebounded concurrent with a global increase in high-profile construction projects. The result is that while construction of a $100 million tower might have required four carriers three years ago, that same project could require eight today, depending on what kind of business you have.

There are issues in general excess, but in this space, automotive-related accidents are having a greater impact. An increase in frequency is driving the loss ratio, and that in tandem with the trend toward verdicts with bigger awards has been particularly difficult for this sector.

In response to this, our construction team has developed risk engineering programs that work with clients on driver training and other automotive controls. This use of telematics has the potential to reduce accidents and, by extension, prevent losses where possible.

Much of this relies on technology that can be implemented to monitor driver behavior, which allows contractors to identify and address problems with a combination of training and disciplinary action. These preventive measures give us a tool for managing and reducing risk, and we work with our contractors to interpret the data generated by this technology and put required controls in place.

When you look at what is expected to unfold in the next few years, you can see the importance of continuity of claims and how this partnership will remain a priority.

Partnering provides advantages
In today’s market, it’s critical to provide Excess in conjunction with Primary, and you can see that many of our competitors recognize the same necessity.

Writing Excess in conjunction with Primary ensures delivery of the right Primary limit structure. Our preference is always to partner, and it’s increasingly necessary to do that as a strategy for helping to mitigate loss. When you look at what is expected to unfold in the next few years, you can see the importance of continuity of claims and how this partnership will remain a priority.

An advantage is that this is how we’ve always approached business: we are, in essence, built to add as many lines of coverage as possible and manage a client relationship across multiple lines. This longtime strategy facilitates approaching this in a manner that works most successfully and makes it possible to combine Excess and Primary seamlessly because we’ve already established that relationship.

What’s ahead
We are starting to see some signs within the Excess world that suggest there may be changes, particularly on a regional level. There are pockets of the United States that are known as being more litigious and that may pull back from that a bit. Given the uncertainties remaining around Covid, we do not expect those changes to emerge for most of 2021, and for now it remains necessary to keep up with the general trend.

Another trend worth watching is the potential for an evolution in tort law. In 2020, Louisiana enacted an Omnibus Tort Reform bill that amended existing law. Prior to its passage, lawyers for the trucking industry were barred from presenting evidence in court that accident victims were not wearing seat belts. The state legislatures in Iowa and Missouri are weighing similar legislative reforms, and we will watch the progress of these measures, which could set new legal precedents whose impact extends beyond trucking.

While certain market drivers and conditions, such as trends in jury verdicts and awards, are beyond our control, it’s important to use the tools we do have at our disposal to minimize losses and reduce risk.

A prime example of those tools is found in telematics and the data generated by monitoring technologies. We can work with our clients to ensure that they have the right workplace policies in place and are engaging in the training necessary to instill best practices across their operations.

Final thoughts
Our risk engineering team therefore plays a crucial role in communicating trends to customers and providing them with information that empowers better decision-making. It’s equally incumbent on our Primary and Excess team members to ensure that our communications are transparent so that customers aren’t caught off-guard by changes and retain their trust and confidence in us.

By harnessing the power of telematics and other technologies, promoting workplace training and education, and optimizing combined Primary and Excess coverage, we emerge in the strongest position to thrive through whatever market fluctuations we experience today and into the future.

About the authors
Ed Totten is Head of Construction Excess Casualty in the Americas. He can be reached at
Bryan Stevenson Head of Construction Primary Casualty in the Americas. He can be reached at

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