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How is the construction insurance industry broken down by spend on different sizes of construction projects? Ideally this would be broken down by geography.
Hello, and thanks for asking for a breakdown of the construction insurance industry by spend on differently sized projects and geography. The short answer is that a breakdown per project size is not publicly available as industry reports only break down the construction industry by building type and not size. I was, however, able to find some information on the overall construction spend and the details of typical construction insurance. Based on earlier questions on the subject, I assume that this question is about the US market specifically. You will find a deep dive of my research below.
APPROACH
By searching through industry and government reports, academic databases, and corporate websites I was able to find a breakdown of the construction industry in the US. This was available by state, as well as the type of construction project. Furthermore, an analysis was done of typical insurance spend on construction products in order to determine the average construction insurance spend.
THE CONSTRUCTION INDUSTRY IN THE US
The total construction spend in the US in the 12 months ending March 2017 was $259 billion, of which $205 billion was private construction and $54 billion was public construction.
1. Private Construction: The sectors with the biggest private construction spend in the 12 months were:
2. Public Construction: The sectors with the biggest public construction spend in the 12 months were:
A full breakdown of all construction spend by project type for the 12 months ending March 2017 can be found in the US Census Bureau's monthly construction report.
CONSTRUCTION SPEND PER GEOGRAPHY
An up-to-date list of construction spend per state is available as part of the Associated General Contractors of America's latest construction data.
6. Knight Cancer Research Building, Oregon Health Sciences University (Portland, Oregon): $160 million
CONSTRUCTION INSURANCE
The insurance taken out by a construction company during a building project can include Workers’ Compensation, Employers Liability, General Liability and Excess Liability. In some instances, contractors will also cover Builders Risk, Environmental Liability, and Professional Liability. The insurance cost of a contractor for a project is typically range between 1% and 3% of the hard construction costs of a project.
According to an analysis conducted by Swiss RE, the construction industry spends more than any other industry on insurance relative to revenues. They break the total insurance bill of a construction company down as follows (as a percentage of revenue):
Based on the assumption of construction insurance spend of between 1% and 3%, the total construction insurance market in the US is estimated to be between (1% x $259 billion) and (3% x $259 billion) or:
The total construction insurance market in the US is estimated to be between $2.59 billion and $7.7 billion.
For the 5 states with the largest construction spend, this is estimated to be:
1. Texas: between $480 million and $1.4 billion
2. California: between $370 million and $1.1 billion
3. Florida: between $220 million and $660 million
4. New York: between $210 million and $630 million
5. Pennsylvania: between $140 million and $420 million
CONCLUSION
Even though it was not possible to find a breakdown of construction projects or construction insurance by project size in the US, an estimate of the total construction market at $259 billion was found as well as an estimate calculated of the US construction insurance market of between $2.59 billion and $7.7 billion. Texas is the state with the most construction spend at $48 billion in 2016.
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