Construction insurers in Asia are adopting a more cautious stance as environmental challenges and emerging technologies shape the region’s construction landscape. However, the industry is poised for growth in 2025, according to WTW’s latest Global Construction Rate Trend Report.
The ongoing development of large-scale infrastructure projects and smart cities, which prioritize sustainability and technological innovations, continues to dominate the region’s construction sector. Public-private partnerships are expected to play a pivotal role in the growth of infrastructure development across Asia, with construction spending projected to rise.
In India, the government’s National Infrastructure Pipeline is driving investments in energy, rail, and urban development. Meanwhile, China is renewing its urbanization efforts despite economic challenges, while Southeast Asian nations such as Vietnam, Indonesia, and the Philippines are focusing on energy, power, and renewable energy projects.
A growing interest in complex infrastructure sectors, including data centers and the semiconductor industry, is also being observed by insurers in the region.
Sustainability remains a key driver in the construction industry, with renewable energy projects, such as battery storage and sustainable aviation fuels, gaining momentum. Additionally, there is renewed interest in nuclear power. These trends align with the development of smart cities, where digitization and artificial intelligence are being harnessed to enhance efficiency and sustainability.
Despite a stabilizing construction insurance market in Asia, with softening premium rates benefiting developers and contractors, insurers remain disciplined in their underwriting practices. The industry has shifted from focusing solely on project-specific policies to regional annual programs, particularly for clients overseeing multiple projects.
Underwriting decisions are heavily influenced by detailed risk assessments and mitigation strategies, with natural catastrophe risks remaining a primary concern. Insurers are cautious about exposures in high-risk areas, with sub-limits for these risks becoming increasingly common. While the industry continues to face global challenges related to extreme weather and natural catastrophes, capacity for coverage remains stable, and parametric solutions offer an alternative when traditional coverage becomes prohibitively expensive.
The construction sector also faces significant challenges, including labor shortages and supply chain disruptions, which contribute to rising costs, delays, and safety risks. Modular construction is emerging as a potential solution to reduce on-site construction time and mitigate these supply chain issues.
The transition from project-specific insurance to operational insurance is another critical phase for insurers and developers, requiring careful planning to ensure continuity of coverage. Although annual contractor policies are less common in Asia than in other regions, the need for seamless coverage during this transition remains a priority.
As the construction industry evolves in Asia, insurers are navigating a complex landscape of environmental, technological, and economic factors to maintain stability while adapting to emerging risks.
Related topics
