Growth in the commercial property insurance market is closely linked to the health of the UK economy and the construction industry.
New developments and office buildings provide new opportunities for the insurers and frequently increase the size of the market.
Before the COVID-19 pandemic, GlobalData had forecasted marginal growth in the construction industry’s output for 2020, following the UK’s resolution about when it would leave the EU. However, with the escalation of the pandemic, GlobalData now expects the industry to contract by 5.8% in 2020.
Although the UK government has not directed construction sites to close, several major contractors have announced they would take precautionary measures and close the sites.
Yasha Kuruvilla, Insurance Analyst at GlobalData, comments: “There is potential for a recovery in the second half of the year, with the government seemingly prepared to push ahead more quickly with the infrastructure spending plans, assuming that the outbreak is contained within Q2 2020.
“However, with businesses struggling with cash flow and some opting for remote working for an extended period of time, the need to insure physical office spaces will decrease. Expensive equipment like laptops will be kept at home, limiting exposure at the property.”
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