Marsh and Beazley team up to offer contractors ESG performance-based PI cover

Insurance broker and risk advisor Marsh has partnered with Beazley to offer construction contractors professional indemnity (PI) cover based on their environmental, social and governance (ESG) performance.

A statement released yesterday (11 December 2023) said the cover will be available to all clients outside of the US that complete the broker’s ESG Risk Rating (ERR).

Construction contractors that score six or higher on Marsh’s ERR will be able to qualify for an additional $1m in PI cover on top of Beazley’s maximum line of $5m.

The cover will protect contractors and sub-contractors from legal claims arising from alleged professional negligence or errors and omissions in their work.

Kelly Looney, chief executive of UK construction, infrastructure and surety at Marsh Speciality, said that “ESG concerns are a growing area of scrutiny for the global construction sector” and that financial institutions are “looking to ESG performance as a marker of sustainable and resilient businesses”.

However, “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 and insurance benefits”.

Strategy development

Marsh’s ERR assessment tool, which was launched in March 2022, works to measure firms’ ESG performance across 19 themes against more than 10 internationally recognised standards and frameworks.

It turn, it aims to help firms identify their sustainability and climate-related risks and opportunities, as well as gain access to additional insurance market capacity.

“As well as being able to access additional insurance market capacity for professional indemnity risks, our contractor clients can use the results of the [ERR] to identify their most critical sustainability and climate-related risks and build greater levels of transparency as they further develop their ESG strategies,” said Looney.

Andrew James, focus group leader, large client professional liability at Beazley, added that “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”.

“We are focused on supporting construction contractors that prioritise ESG,” he said.

“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.”