London | 11 December, 2023
Additional professional indemnity cover available for contractors based on strength of ESG Risk Rating
Marsh, the world’s leading insurance broker and risk advisor and a business of Marsh McLennan, today announced a new collaboration with specialist insurer Beazley to offer construction contractors access to additional professional indemnity (PI) cover based on their environmental, social and governance (ESG) performance. The additional capacity is available globally to clients outside of the US that complete Marsh’s ESG Risk Rating (ERR), subject to their ERR score meeting Marsh and Beazley’s threshold.
Launched in March 2022, the Marsh ESG Risk Rating is an assessment tool that measures an organisation’s ESG performance, enabling them to identify their sustainability and climate-related risks and opportunities, and gain access to additional insurance market capacity. Measured against more than 10 internationally recognised standards and frameworks published by leading organisations – including the Global Reporting Initiative, Sustainability Accounting Standards Board, Task Force on Climate-related Financial Disclosures, and the World Economic Forum – the ESG Risk Rating scores a client’s performance across 19 ESG themes.
PI insurance protects contractors and sub-contractors in the event that claims are made against them relating to alleged errors in their professional activities, including issues relating to the UK’s Building Safety Act 2022 and cladding matters. Construction contractors that meet the underwriting criteria can qualify for an additional US$1 million in PI cover – 20% more on top of Beazley’s US$5 million maximum line – when they score six or higher on Marsh’s ESG Risk Rating, providing contractors with a tangible reward in return for a positive ESG performance.
Commenting on the launch, Kelly Looney, CEO, UK Construction, Infrastructure & Surety, Marsh Specialty, said: “ESG concerns are a growing area of scrutiny for the global construction sector, and financial institutions are looking to ESG performance as a marker of sustainable and resilient businesses. Despite their best efforts, many contractors are not always able to satisfactorily display their positive ESG goals in a way that allows them to obtain meaningful risk & insurance benefits.
“As well as being able to access 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 build greater levels of transparency as they further develop their ESG strategies.”
Andrew James, Focus Group Leader, Large Client Professional Liability, Beazley said: “We are focused on supporting construction contractors that prioritise ESG. Companies that look after the environment, their communities and have strong governance are also likely to be successful in managing and mitigating their risk landscape. A key role of a specialty insurer is to work with clients as they seek to improve their risk management and we are pleased that for construction contractors that perform well against ESG criteria, we are able to support their efforts by offering them additional capacity.”
