Aon’s latest 2025 Global Construction Insurance and Surety Market Report found the construction insurance market cautiously optimistic, entering a softening phase with increased insurer capacity and a surge in large-scale projects. Tech-driven efficiencies and improved risk management are driving growth. However, global natural catastrophes, economic volatility, and supply chain disruptions remain significant challenges.
“While the construction insurance market has real strengths and potential for growth, it must also evolve and navigate a variety of challenges if it is to sustain its momentum,” says Philip Cronje, Business Unit Manager for General Speciality at Aon South Africa.
Key Industry Trends
- Rising Natural Catastrophes: Catastrophic losses are driving up rates and straining capacity in high-risk areas.
- Two-Tiered Market: Low-risk projects benefit from favourable terms, while high-risk classes face rising costs and limited coverage.
- Tech-Driven Risk Management: Innovations in data and monitoring are improving underwriting and reducing claims.
- Cyber Risk Focus: Growing digitalisation increases cyber threats, requiring stronger security and underwriting practices.
- Economic & Geopolitical Uncertainty: Inflation, geopolitical tension, and supply chain instability threaten project timelines and costs.
Product Line Insights
- Construction Property Insurance – The property insurance market remains stable but is increasingly shaped by climate risk. While public infrastructure investment and improved safety practices support favourable conditions, extreme weather events are driving caution among insurers. Capacity is generally sufficient, but coverage for catastrophe-prone projects is more difficult and costly. Well-managed risks with strong controls continue to secure competitive terms.
- Professional Liability Insurance – Rising claim severity and social inflation are key concerns. Capacity is available for lower-risk and well-managed projects, but high-risk developments, such as mega or renewable projects, face tougher placement and underwriting scrutiny. Insurers are paying closer attention to limit aggregation and, in many markets, are pushing for higher retentions instead of premium increases.
- Construction Casualty Insurance – The casualty market is broadly competitive, with strong insurer appetite and adequate capacity. Project-specific and commercial construction policies tend to attract more favourable terms than residential or annual programs. However, a two-tiered market is emerging – risks with poor loss histories or in high-hazard categories face rate pressure and more selective underwriting.
- Surety – Surety continues to grow steadily, with annual expansion projected at around 5% and a potential global market size of $30 billion by 2030. Key growth areas include infrastructure, renewables, and utilities. Stable rates and capacity prevail, though underwriting remains focused on credit quality and performance. Regulatory changes and Basel IV are increasing demand, particularly as surety becomes a more attractive alternative to bank guarantees. ESG factors are also becoming more influential in underwriting decisions.
Risk Management Strategies
The months ahead hold strong growth potential for construction, especially in complex infrastructure projects. Aon points out that success depends on proactive risk management and strategic insurance placement, and advises the following risk management strategies for construction insurance buyers:
- Start Early, Especially for Complex Projects – Begin the insurance placement process well in advance, particularly for high-risk or large-scale projects where underwriting can be more time-consuming. Early engagement allows for better market access, stronger negotiation leverage, and adequate time to align coverage with contract obligations.
- Evaluate Contract Structures Thoroughly – Contracts should clearly allocate risk and align with insurance coverage. Gaps between contractual obligations and insurable events can lead to uncovered losses. Key areas to review include scope creep, delay and disruption clauses, payment terms, design responsibility, and health and safety provisions. Legal and insurance teams should collaborate closely during contract review.
- Implement and Clearly Document Risk Controls – Robust site safety, quality control, and risk mitigation measures are critical, not only for project outcomes, but also for insurer confidence. Documenting these controls in detail demonstrates good governance and can significantly improve the quality and cost of coverage, especially for high-risk projects.
- Consider Alternative Risk Transfer Solutions – Traditional insurance may not fully address all exposures. Tools like parametric insurance can provide rapid, predefined payouts following extreme weather events. Captives can help organisations retain risk in a controlled way, smooth insurance costs over time, and access reinsurance markets directly. These options are particularly useful where traditional markets are limited or volatile.
- Develop a Pre-Loss and Post-Loss Framework – Claims preparedness should be embedded into the project lifecycle from the outset. This includes identifying loss adjusters early, creating claims protocols, stress testing loss scenarios, and establishing business continuity plans. A proactive approach can minimise disruptions and speed up recovery when losses occur.
“A knowledgeable broker with construction expertise is essential to navigate shifting markets, optimise program design and secure competitive terms. The best brokers combine technical understanding with market intelligence and have strong relationships with underwriters globally. Their guidance is especially valuable in managing complex, cross-border, or high-value projects,” Philip concludes.
Access the full report here: https://www.aon.com/en/insights/reports/global-construction-insurance-and-surety-market-report
