Markel Just Cut Construction Coverage In Half. Here Is What That Does to Your Supplier Insurance Requirement Tiers

Markel Group's specialty insurance unit reduced its construction-related book of business from approximately 40 to 45 percent of the division down to roughly 20 percent over the past year, according to CEO Simon Wilson on the company's Q1 2026 earnings call on April 29, 2026. For procurement and risk leaders who maintain insurance requirement tiers across a supplier base, this is an operational signal rather than a market commentary point. The casualty market is contracting in real time, and the limits some of your suppliers will be able to obtain at renewal have already changed.

This piece is part of a series drawn from our review of twelve Q1 2026 insurance carrier and broker earnings calls held between April 16 and April 29, 2026.

What did Markel actually say about construction coverage in Q1 2026?

Wilson described the move in plain language during the Q1 2026 call: “the second thing we've done in that book of business, which is material, is reduce the proportion of construction-related business that we're writing from around about, I think it was 40% to 45% of that book of business down to around 20% and maybe slightly below 20% now.”

He explained the mechanism behind it on the same call: “what we're seeing in the U.S. is that when we see cases going to court or being settled, those numbers are often a lot bigger now than they were maybe 8, 9, 10 years ago. People call that social inflation. Well, the way that we and several of our peers have dealt with that is by reducing limits.”

CFO Brian Costanzo confirmed the financial impact in the same call. Gross written premium in the Wholesale and Specialty division declined 9 percent versus Q1 2025, “driven by a softer property and marine premium rate environment and decreases in binding contractors and casualty.”

Why are carriers reducing limits instead of just raising rates?

Markel is one of several specialty carriers using the same playbook. On the Brown & Brown Q1 2026 earnings call on April 28, 2026, CEO Powell Brown told analysts: “On the casualty front, not much has changed versus prior quarters, the ability to get higher limits is extremely challenging. Pricing continues to increase, primary layers are becoming more expensive and carriers are decreasing the limits they'll offer.”

W.R. Berkley CEO Rob Berkley made the same observation on the company's April 21, 2026 call when asked about casualty reinsurance posture: “our casualty portfolio within reinsurance was down considerably in the quarter. And that is not because we are charging less for the same exposure. It is because that book of business is shrinking.”

Limit reduction is now a portfolio-level decision across multiple specialty carriers, which means suppliers in construction trades, contractor categories, and high-severity casualty segments are renewing into a market where higher limits are sometimes unavailable at any price.

What does this mean for supplier insurance requirement tiers?

According to Certificial's 2026 Insurance Requirements Benchmark, most enterprise procurement programs maintain tiered insurance requirements organized by supplier risk level. The cross-industry aggregate:

• Low risk suppliers: $1 million general liability per occurrence, no umbrella required
• Moderate risk suppliers: $1 million general liability per occurrence with a $1 million umbrella
• High risk suppliers: $1 million general liability per occurrence with a $2 million to $5 million umbrella

For programs that have not been refreshed recently, tier definitions were set when the casualty market was softer, capacity was broader, and severity assumptions were lower than they are today. Programs that updated their tiers in 2024 or 2025 should still pressure-test against current market availability, because the carrier disclosures above describe a market shift that accelerated through Q1 2026.

Three operational scenarios are becoming more common in 2026.

1. A High risk supplier renews with a reduced umbrella limit.‍

The MSA requires a $5 million umbrella. The new COI shows a $2 million umbrella, with the primary general liability still meeting the $1 million contractual minimum. The umbrella has been cut by 60 percent. Procurement has to decide whether to accept the reduced umbrella, escalate the supplier, or document an exception. This is the most common scenario in 2026 because excess and umbrella layers are where carriers are pulling back fastest.

2. A subcontractor's umbrella policy non-renews mid-program.

The supplier did not notify procurement because they did not understand the contractual obligation in the MSA. The general contractor on the project finds out at the next compliance audit, often six to twelve weeks after the lapse, with the project already exposed.

3. A supplier's hired and non-owned auto endorsement is dropped at renewal.

The new COI shows the auto liability limits intact and passes the standard verification check. The HNOA endorsement, which extended coverage to the supplier's drivers using personal vehicles for work, is no longer in place. The supplier's drivers continue working on the general contractor's projects. Any claim involving a hired or non-owned vehicle is now uncovered. RLI COO Jennifer Klobnak signaled this kind of contraction on the April 23, 2026 call, saying her company's appetite is "more limited for auto on excess liability business."

Each scenario produces a compliance failure that did not exist twelve months ago, and the same compliance process is now generating those failures because the underlying casualty market has shifted. Brown & Brown CEO Powell Brown told analysts on the April 28, 2026 call that "we do not expect this trend to change materially over the coming quarters." Markel's commentary describes limit reduction as how the carrier and its peers are dealing with social inflation, an ongoing structural condition rather than a one-quarter event. Procurement should plan for these scenarios to persist into 2027 rather than waiting for the market to revert.

The Tier Audit Framework

A practical approach to re-baselining supplier insurance requirements over the next 30 days. Six steps.

1. Pull current tier definitions and exact limit requirements. If they have not been reviewed in the last 18 months, they almost certainly predate the Q1 2026 capacity contraction. If they have been reviewed more recently, pressure-test them against the carrier disclosures in this piece before assuming they still hold.

2. Pull the top 50 suppliers by spend and their current COIs. Match each supplier's current limits against the tier requirement in their contract.

3. Calculate the gap rate, defined as the percentage of audited suppliers whose current insurance does not match the contractual requirement. A gap counts when the COI shows a lower limit than the contract requires, a missing required endorsement (for example a missing Additional Insured or Waiver of Subrogation), or a reduced notice-of-cancellation period. Track each gap type separately so the remediation conversation has specifics. If the gap rate is over 5 percent, the market has moved past your tier definitions.

4. Categorize suppliers by exposure type. Construction trades, commercial auto fleets, professional services, technology vendors, and others. The category-risk lens often matters more than the supplier-specific lens for this exercise.

5. Re-baseline tier limits against current market availability for each category. This is the conversation procurement, risk, and legal need to have together. The contractual minimum has to be defensible against what the market can actually produce.

6. Build the exception process. There will always be a tail of suppliers who cannot meet the standard tier limit. A documented exception process is more defensible than a quiet pattern of overlooked failures.

Where Smart COI fits

Static COI collection at onboarding does not work in a market where mid-policy non-renewal and limit reduction are this frequent. The certificate sitting in your file may have been valid the day it was issued and invalid six months later, with no signal in either direction.

Certificial's Smart COI is a live policy-connected insurance verification model. The COI tracking category includes several platforms with different approaches to automation and verification. The Smart COI difference is the direct data feed from the supplier's carrier or broker, which surfaces policy changes when they happen rather than at the next periodic certificate refresh. When a supplier's policy changes, whether through cancellation, limit reduction, vehicle removal from an auto schedule, or carrier substitution, the change appears in the dashboard automatically. The compliance status reflects what is actually in force rather than what was in force at onboarding.

For procurement teams running the Tier Audit Framework above, configurable compliance requirements by category and tier turn the audit into a continuous process rather than a quarterly project. Integration with procurement and TPRM platforms (Graphite Connect, Apexanalytix, Achilles, Aravo) keeps the work inside the systems your team already uses.

Close

Spend two hours next week pulling your top 25 suppliers' current COIs against your contractual minimums. If the gap rate is higher than 5 percent, the market has moved past your tier definitions. The audit result drives a re-baseline of tier requirements, an exception process build, or both.

About this analysis

This piece is part of a series drawn from our review of twelve Q1 2026 insurance carrier and broker earnings calls held between April 16 and May 1, 2026. Companies covered: Marsh McLennan, Travelers, W.R. Berkley, Chubb, Selective Insurance, RLI Corp, The Hartford, Brown & Brown, Markel Group, Arthur J. Gallagher, WTW, and Aon. Quotes were extracted from published transcripts and verified against secondary sources.