Engineering & Construction

Special market: construction  A holistic view of complex projects and expert support

The construction industry is booming, even in these turbulent times. In the construction industry, as well as among investors and users, ESG standards are increasingly coming to the fore. There is growing demand for energy-efficient buildings, and the use of climate-friendly building materials is becoming increasingly widespread. The EU’s Green Deal, with its goal of becoming climate neutral by 2050, will certainly reinforce this trend and enable further investment, particularly in infrastructure. With international supply chains now noticeably susceptible to disruption, higher investment and new construction projects are already being seen and expected to continue in system-relevant industries.

Lastly, however, all parties are facing further challenges in what is already a complex field. Uncertainties are being brought about not only by rising commodity prices, uncertain supply chains and a highly volatile market environment. The need for hedging by financing banks and all parties directly involved in projects is also increasingly evident. This complex situation, with its wide mix of stakeholders, is also having an effect on insurance cover for the risks concerned. We are witnessing a continued trend towards integrated project insurance (construction/assembly, liability, planning liability). At the same time, however, there is growing demand for consultation when it comes to the placement of projects on the insurance market under good conditions.

Market situation

Consistent risk management takes a holistic approach. Against this backdrop, “combined” project insurance covering the full spectrum of construction projects has established itself as the most viable solution. It protects building owners, all the main contractors and subcontractors working on the construction project, as well as planners, architects, engineers and other specialists. It also takes into account the interests of financiers and investors.

Integrated Project Insurance (IPI) is ideal for classic buildings, pure civil engineering and engineering structures, e.g. in the infrastructure sector, as well as for complex industrial plants.

This solution is being offered by more and more insurers. Nevertheless, there has been a trend reversal: following the considerable hardening of the insurance market for project insurance (especially on international markets) in recent years, the situation has now become more stable. Individual insurers are still pursuing a cautious underwriting approach or are only offering individual coverage modules on a highly restrictive basis. Overall, however, insurers continue to provide comprehensive insurance cover with high-quality content and high capacities. The number of potential lead insurers for major projects remains unchanged.

Brokers specialised in construction projects are key players at the heart of complete solutions by ensuring the right content, the best possible market coverage and close project and claims support. This is because, in addition to a sound risk analysis, broad benchmarking provides the basis for better decision-making. Today, thorough, expertly prepared project data is essential for optimum placement on the insurance market. With underwriting capacities now tightening and premiums rising, customers gain further advantages through brokers who not only have broad access to local primary insurance markets but also to international capacities and the reinsurance market.


Even if ESG criteria have now become a matter of course for insurers in their investment strategies, a small number of insurers are still seen as highly hesitant in their original role as risk carriers of new technologies. This is why Aon works together with customers to reduce existing concerns about individual risk carriers and to identify suitable solutions.

Taking timber-hybrid projects as an example, Aon works together with the various relevant parties such as architects, contractors, project developers or drying companies.

Individual insurers also show sensitivity in this regard. In an increasingly complex world, interdisciplinary support from specialised insurance brokers is essential.

Risk prevention is becoming an ever more important factor when it comes to meeting insurers’ increased expectations. New technical solutions are becoming increasingly established, and there has been significant progress in their practical applicability in recent years. For example, digital tools such as mobile fire alarm and pipeline monitoring systems can quickly detect fire and water damage, report it to the responsible departments and limit the extent of the damage. These new tools can be adapted quickly and easily in line with the state of the building in question. There has also been progress in the technical possibilities available to prevent personal injury; for example through the development of proximity alarm sensors. Here, the cost-benefit ratio is favourable. Similar solutions for preventing water damage can also make an important difference.

In addition, Aon has identified an increasingly defensive attitude among insurers in claims negotiations. This explains why professional claims analysis and support to counter restrictive settlement behaviour in the event of a claim continue to be important.

In view of these issues, it is becoming clear that the conclusion of a project insurance policy is not the only decisive factor. After all, an appropriate insurance concept has to be brought to life by the right team. With a holistic approach and professional advice, insurance and construction specialists create added value that goes beyond the mere transfer of risk. Advice and support for the insurance concept and any associated services will increasingly become an integral part of projects, enabling the best possible results in the market to be achieved – even for the most complex projects.