Hard Market Deepens Divide Between General and Trade Contractors in Construction Insurance

The construction insurance sector remains entrenched in a hard market cycle, but its effects are becoming increasingly unequal. While general contractors (GCs) are starting to experience some relief, trade contractors—especially those in high-risk trades—are facing mounting difficulties in securing coverage.

“We’re seeing a divide emerge in how general contractors and trade contractors are being treated in the current market,” said Kevin Hahn, senior vice president at Jencap. “It’s forcing agents to think differently and act more strategically.”

According to Hahn, general contractors in key markets like New York are starting to benefit from insurers' shifting appetites, particularly when presenting strong risk profiles that include solid loss histories, rigorous subcontractor controls, and well-documented safety procedures.

“More excess capacity is available, and rates are stabilizing for the most desirable risks. The general contractor insurance market is looking up,” Hahn said.

However, for trade contractors—especially those involved in roofing, exterior masonry, concrete, and steel erection—the environment remains challenging. These high-risk trades frequently require work at height and involve direct labor exposure, triggering increased scrutiny under New York’s Labor Laws.

“These types of trades operate from heights, require a direct labor workforce, and are heavily exposed to the New York Labor Laws,” Hahn explained.

As a result, insurers are scaling back coverage capacity, tightening their underwriting criteria, and introducing new policy exclusions. Even contractors with strong track records are encountering dramatic rate hikes—or worse, an inability to secure quotes.

“Even accounts that were once considered solid are now seeing steep premium increases or struggling to find coverage at all,” Hahn said.

To navigate the worsening landscape, brokers are turning to more complex placement strategies. Some are relying on non-admitted carriers, while others are stacking layers of coverage from different providers to assemble comprehensive solutions.

This increasing segmentation of construction risk is pushing insurers to move away from one-size-fits-all approaches. Underwriters are differentiating policies based not just on trade, but also location, type of work, and operational risk.

“This segmentation means we can’t rely on what worked last year,” Hahn said. “Each client now needs a tailored approach. What’s available to one contractor might not apply at all to another, even within the same market.”

This new reality is transforming how brokers approach the marketplace. Today’s environment demands precision: matching clients’ safety records, job scopes, and regional exposures to the exact appetites of available carriers.

Brokers Must Shift Strategy Amid Market Pressures

To stay effective, brokers need to sharpen their strategies, particularly when working with trade contractors who are most affected by shrinking capacity and increasing costs.

“Clients – especially trade contractors – need to understand the realities of the current market, from higher premiums to limited capacity and tighter terms,” said Hahn.

Thorough, well-documented submissions have become non-negotiable. Carriers now require comprehensive applications with current safety statistics, subcontractor agreements, and detailed scopes of work to even consider underwriting the risk.

“Underwriters want clean, complete submissions with current safety records, subcontractor practices, and detailed scopes of work,” Hahn emphasized.

In situations where standard markets fall short, brokers are increasingly turning to the excess and surplus (E&S) lines or working with wholesalers who specialize in high-risk sectors. Layered placements are also on the rise as brokers try to piece together viable coverage packages.

“Help them invest in the kind of risk management that matters to underwriters – like site-specific safety protocols, OSHA training, and return-to-work programs,” Hahn added.

Having strong wholesale partners who understand niche construction markets has become essential. Jencap, for example, works closely with retail brokers to craft creative coverage solutions that align with current underwriting trends.

“Our relationships across the construction sector allow us to think outside the box when placing coverage, especially for trades,” Hahn said.

Despite the challenges, Hahn remains optimistic that brokers who embrace the new realities will be well-positioned to guide their clients successfully.

“The construction insurance market isn’t softening across the board—it’s splitting,” he said. “Agents who understand this divide and adjust their strategies accordingly will be the ones who succeed in guiding their clients through it.”
As economic pressures, labor challenges, and legal liabilities grow more complex, the construction insurance market is evolving rapidly. Brokers must now play a more consultative role, helping clients navigate a segmented landscape where each contractor’s profile demands a tailored solution. Those who fail to adapt risk leaving their clients exposed in one of the toughest coverage markets the construction industry has seen in years.

Originally reported by Kenneth Araullo in Insurance Business.