Marsh Applies ESG Risk Rating in the Construction Industry

Leading insurance broker and risk advisor Marsh has announced it will team up with Beazley to offer additional professional indemnity (PI) coverage to construction contractors (globally, excluding the U.S.) based on their ESG performance. Marsh will utilize its ESG Risk Rating tool, which was developed in March 2022 and scores performance across 19 ESG themes in line with 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.

“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" said Kelly Looney, CEO, UK Construction, Infrastructure & Surety, Marsh Specialty.

Looney continued “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.”

As sustainability related building codes develop, buoyed by the market's focus on sustainability and decarbonization strategies for real estate, construction contractors and subcontractors are looking to increase their PI coverage as they navigate less familiar designs, technologies and construction practices.

Source: Marsh, https://www.marsh.com/ie/about/media/marsh-beazley-reward-esg-global-construction-industry.html