Specialist insurer, to offer construction contractors additional professional indemnity (PI) cover based on their environmental, social and governance (ESG) performance.
“ESG concerns are a growing area of scrutiny for the global construction sector, and financial institutions are looking to ESG performance as an indicator of sustainable and resilient businesses,” said Kelly Looney, CEO, UK Construction, Infrastructure and Surety, Marsh Specialty. “Despite their best efforts, many contractors are not always able to satisfactorily demonstrate their positive ESG objectives in a way that allows them to obtain meaningful risk and insurance benefits.”
The additional capacity will be available to clients outside the US who complete Marsh’s ESG Risk Rating (ERR). The cover they will be able to access will be based on their ERR score meeting the threshold set by Marsh and Beazley.
“We are focused on supporting construction companies that prioritise ESG. Companies that care about the environment, their communities and have strong governance are also likely to be successful in managing and mitigating their risk landscape,” said Andrew James, Focus Group Leader, Large Client Professional Liability, Beazley.
Contractors who can meet the underwriting criteria can qualify for an additional $1 million of PI cover if they score a six or higher on the ERR. This is a 20% increase on Beazley’s $5 million maximum limit.
PI insurance protects contractors and subcontractors should claims be made against them in relation to alleged errors in professional activities, such as issues that may relate to the UK’s Building Safety Act 2022, as well as cladding matters.
“A key role of a specialist insurer is to work with clients as they seek to improve their risk management, and we are pleased that for contractors who perform well on ESG criteria, we can support their efforts by providing additional capacity,” said James.
Launched in March 2022, Marsh’s ERR is an assessment tool that measures an organisation’s ESG performance. It allows the company to identify sustainability and climate-related risks and opportunities, as well as gain access to additional capacity in the insurance market.
“In addition to gaining access to additional insurance market capacity for professional indemnity risks, our contractor clients can use the results of the ESG Risk Rating to identify their most critical sustainability and climate-related risks and to provide greater transparency as they develop their ESG strategies,” said Looney.
The ERR assesses a client’s performance across 19 ESG topics against more than 10 internationally recognised standards and frameworks published by leading organisations such as the Global Reporting Initiative, the Sustainability Accounting Standards Board, the Task Force on Climate-related Financial Disclosures and the World Economic Forum.
