SPEAKER 2: Welcome to the global construction market update special, a subset of the WTW Construction Blueprints podcast. In this short series, you'll hear from our experts on current market conditions for construction insurance.
IRIS CHAN: I am Iris Chan, Head of Construction, Asia. And today, we have my colleagues, Sui Jin Wong, and he is the Director of Asia, has been working in Asia construction for a long time. And today, we would like to cover a few questions to ask Sui Jin about our market, market outlook, construction industry, what he thinks about this and what he thinks about the change in 2026? Sui Jin, welcome.
SUI JIN WONG: Thank you very much, Iris. A pleasure to be here.
IRIS CHAN: So can I ask you, can you talk about the current state of construction insurance marketplace in Asia?
SUI JIN WONG: Sure. I mean, overall, the construction insurance market across Asia still remains very competitive. It's very, very well capitalized. We're seeing that capacity is very abundant with very, very strong participation actually from both international and domestic insurers. So generally, we see appetite remains very, very high across various industries. This includes infrastructure, power, renewables, energy, and also large commercial developments.
I think from a pricing perspective, the market continues to soften. This is really driven by intense competition as well as underwriters and insurers budgets and also a very, very benign loss environment, especially lower net cap losses compared to previous years. I think importantly, in terms of coverage, it still remains very, very broad and largely stable. Underwriting has actually became a lot more refined and sophisticated. They do utilize quite a fair bit of risk analytics and focusing really, really closely on project quality, location, and exposure. Therefore, we are more willing to offer a more tailored, enhanced coverage solutions when project risk qualities are clearly demonstrated.
I think from an activity standpoint, Asia still remains one of the most resilient construction regions globally, particularly in South Asia and Southeast Asia, where it's expected to deliver higher growth compared to other regions.
IRIS CHAN: Thank you, Sui Jin. It seems like we had a soft market and lots of capacity. You also see a bit of rate reduction. But obviously, underwriters look for quality project and then climate change and all this that also affecting insurance company. How would they like to select like that CAD exposure? So obviously, the WTW team, they will contribute a lot in our underwriting submission and helping underwriters to understand the risk and helping clients to manage their risk exposure, which is really good. And what do you think about 2026?
SUI JIN WONG: I think from an activity standpoint, it's in Asia, particularly. It still remains firmly positive. I mean, looking at the global data report, overall construction growth is forecast to accelerate quite rapidly in 2026. And Asia remains to be a key contributor to that recovery compared to previous years. So in Asia, we are seeing growth being supported by the infrastructure investments such as transportation, rail and airports. That's very, very strong momentum in renewable energy and also conventional power generation.
And I think, as with all other regions, critically, the rapid expansion of data center construction. So in Asia, we are seeing that data centers are emerging as a major structural driver. The scale and pace of data center development and importantly, the knock on demand that this creates for power generation and transmission infrastructure. These projects are typically large, complex, and capital intensive, which is actually sustaining the activity and demand for construction insurance capacity across this region.
IRIS CHAN: Thank you. Thanks, Sui Jin. And it also seems we have quite a bright future in 2026. A lot of construction projects coming in. We got everyone to talk about data center and understand the team has already working quite a lot of data center and gained a lot of experience from data center itself, and also all the infrastructure around data center. And I also understand we have a practice group around the region, and they are focused on data centers in respect of the technology and development and risk analytics. So surely, that will help our clients to develop their data center and ensure their investment are being properly looked after.
So can I ask you, what you think is the current issue externally, politically-current issue affecting the construction industry. What they think is the most important one?
SUI JIN WONG: We work with multiple stakeholders in various projects and across various industries. And really through our interaction with our clients, there are few consistent challenges that we are seeing across Asia. Firstly, cost pressures are key. It's still remaining very elevated. There's ongoing high material prices, mainly driven by supply chain reconfiguration issues, global trade disruptions, which is a key challenge, particularly, with the current geopolitics that's happening across the globe. Contractors are also facing skilled labor shortages, which actually impacts their productivity, as well as delivery timelines.
The second issue is the increasing use of prototypical or first of its kind technologies, particularly when long lead times for established OEMs are delaying project delivery. In many cases, the insurance markets remain unable to provide fully insurable solutions for such prototypical machinery, leading to coverage limitations, exclusions, and higher retained risks for sponsors and bankability issues. And finally, within Asia, particularly in Japan and Philippines, that exposure still remains a high and key underwriting focus in certain geographies, particularly for large, complex projects where aggregation and climate-related risks needs to be carefully managed. So overall, these are the three key highlights and issues that is common themes in our interaction with our clients in the region.
IRIS CHAN: Sui Jin, I'm sure that it's common challenges all around the world. When you talk about the supply chain, the cost increased, the labor shortage and also the climate change directly affecting the risk of major infrastructure projects and major projects around the world. That is the area we are all looking at closely and with our clients to manage those risk exposure and try to change our policy wording and policy coverage in different countries and find five syllable capacity in the market to help our clients to manage such risks. But certainly I totally share what you just your view of the issue, the challenge. What the construction market have in Asia. Thank you. Thank you.
So 2026-- now we are in 2026, would you foresee any change? I understand you just mentioned we have a lot of capacity in Asia. And also the market is quite soft. But bear in mind they also have a number of challenges. We are facing in respect of risk exposure. And what do you think about 2026 in respect of insurance capacity appetite? And would that be price still solved? Would there be any big fluctuations you will foresee in 2026?
SUI JIN WONG: Yes, I think looking ahead, in terms of capacity, appetite, or pricing. I think overall conditions are still very, very favorable for buyers. So from a pricing perspective, construction rates across Asia are expected to remain soft throughout this year. It's very, very competitive soft environment and also very favorable underwriting performance continues to help support this downward pressure on pricing, particularly for well-managed projects with strong risk controls and limited CAD exposure.
However, that said. This is not uniform projects with higher technical complexity. If there's adverse loss experience or elevated exposure, they can still expect to see firmer pricing or even tighter coverage terms. Capacity overall remains readily available. While we are not seeing significant new entrants into the market, the current existing insurers are, in our conversation with them have expressed that they do want to increase their line sizes in line with their growth and budget targets. This is a very significant increase in Chinese interest participation across Asia, particularly in Southeast Asia, where it's contributing to both project flow, as well as expanding the available capacity within specific markets. And this actually drives competitiveness with regards to not just pricing but coverage.
So I think overall, it's a very, very good market for clients to be proactive. Our advice to clients is really to leverage on this soft current market environment with pricing soft and capacity readily available. Many clients are using this window to optimize their program structure. So in our discussion with clients, we are reassessing their CAD limits. We're exploring portfolio or facility placement to help manage their multiple projects, as well as their ongoing and future projects more efficiently.
So I think overall Asia construction insurance market remains firmly buyer friendly, capacity is stable, appetite is strong. And the competitive conditions continue to support broad coverage and competitive premium accounts. So looking ahead, projects that demonstrate strong execution are where they are disciplined risk management and alignment with insurers appetite will benefit most strategic clients, particularly those utilizing what I've mentioned earlier, our portfolio approaches, our facility approaches with long-term insurer partnership are best positioned to leverage the current market conditions.
IRIS CHAN: That's great. So it seems like that will be another buyer market, again, buyer friendly as using your word. And so understand underwriter would be very welcome of well-managed project and have good risk exposure projects. So basically, what it means is project owner can further transfer their risk or some have come out from the challenges you just mentioned to insurance market. At the same time, they save premium, and also they are moving more risk from the challenge they got now to the insurance market, which is a very good timing for your clients to really think of how to optimize their program.
Can I ask you one more question? So you mentioned about unproven technology. So we have lots of markets in Asia and lots of capacity. And also now, we got a lot of new technology. We want to the entire construction market want to increase their productivity. So that's why we can understand, and also we got data center, need more power. And we required actually to have a more new types portal types or that is unproven technology. Not yet, I say not yet proven technology coming out. So what is your advice to our clients? How would they ensure those unproven technology to insurance market? Would that be possible actually?
SUI JIN WONG: Yeah, I think the issue with unproven technology is really driven from the supply chain disruption and issue, where more established technologies are not as easily available. Hence, that's why clients are looking towards more unconventional or predictable technology that are readily available. In order to overcome the risk transfer aspects of such technologies, we work very, very closely with our risk analytics team, with our technical experts and advisors to review and underpin the technical issues and translate this information effectively into the insurance market to get them comfortable with regards to the technology risk that is in play here.
Also, at the same time, it's not just between the equipment manufacturer and the developer, but especially for project finance projects. We do have to take into account of lenders requirements and issues as well. So really it's an interplay between developers, the OEMs, their finances, and us as brokers to be able to effectively transfer, mitigate, and reassess the risks in order for the project to be bankable and viable.
IRIS CHAN: Thank you, Sui Jin. That is such a valuable comment and also highlight how the WTW teams, including the broker, the risk analytic team, risk engineer, work very closely with our clients and their project team. So as to develop a suitable insurance for them, even some times that may not necessarily be fully understand and welcome by insurance company. Yeah, but we would help our client to deliver that. So thank you, Sui Jin. Really appreciate all your comments for this season. Thank you. Thanks a lot.
SUI JIN WONG: Pleasure. Pleasure.
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