2014 saw myriad large builders risk losses when multi-story wood frame projects in San Francisco, Houston and Rockville, Maryland suffered serious fire damage.

But the line of coverage involves more than just frame construction. Here’s what to keep in mind about the market heading into 2015.

Pricing Trends

Overall, trends in builders risk insurance rates are hard to pin down. “From a pricing standpoint, it really depends on what people want to do and how risk-averse they are,” says Dan Feige, head of marine and engineering lines for Zurich product underwriting in North America.

For some classes, “pricing will continue to be competitive,” Feige says. “There’s a willingness in the industry to take on more risk. There’s confidence too after what we’ve been through from an economic standpoint, and a desire to grow the business.”

That applies particularly to “superior risks” like ground-up construction and risks with either minimal natural catastrophe exposures or none at all, says Sharon Primerano, chief underwriting officer for the marine practice at The Hartford. “That’s just really hot right now, and the rates have been driven pretty low,” she explains. “There seems to be plenty of capacity out there.”

But in a hard-hit class like frame construction, “pricing seems to have tightened up some,” Primerano explains. And renovation projects will encounter more stable rates “because they’re a tougher risk—companies tend to have tighter underwriting guidelines,” she says. “Some companies don’t have any appetite for renovation and some have a limited appetite, so that helps keep the pricing at a level place there.”

On the Horizon

As competition drives rates lower for superior risks, expect terms and conditions to broaden. “We’re seeing things like higher flood and earthquake limits than in the past,” Primerano notes. “On a builders risk, there’s the limit for the project and there’s also a limit for temporary location and property and transit. Those limits are also being driven up.”

In terms of emerging risks, the energy sector in particular will remain firmly in the builders risk spotlight for the foreseeable future. “Energy has obviously been driving a lot of growth in the last few years,” Feige says. “There’s a bit of caution with that with world events, which should change that landscape somewhat. But there’s still a commitment in North America in the energy space, and it’s not just fossil fuels. It’s also renewable.”

Primerano agrees, noting solar energy in particular is likely to gain traction in 2015. “There’s not as much capacity out there for those risks—there’s a limited market. But we’re certainly still seeing them,” she says.

In addition to energy, “we’re seeing health care projects, transportation projects and a lot of new schools and renovations of schools,” Primerano says.

“Some of these things are driven by the marketplace while others are just driven by pure need,” Feige adds. “But at the same time, people are coming out of the fog of the recession. It’s really an exciting time.”

Jacquelyn Connelly is IA senior editor.