SPEAKER: 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.
MIKE VENABLES: Hello and welcome back to our Global Construction podcast series. We are discussing the current state of the market across Great Britain, Europe, and the Middle East. I'm Mike Venables, construction broking leader for Great Britain, Europe, and the Middle East. And today, I'll talk you through the key themes shaping the construction insurance market and what we can expect as we move into 2026.
We will start with the state of the market. Let's start with the big picture. We ended 2025 with more market capacity and in many areas, stabilizing of softer pricing. That is especially true where risks are well managed and not heavily exposed to natural catastrophes. New entrants and a growing appetite for insurers have definitely increased competition, leading to rate reductions on many projects and annual CAR and EAR placements.
In Great Britain, the market is quite competitive for standard builds, and mid-market programs are seeing more favorable terms. But high-rise buildings and complex engineering projects still face closer security, particularly around fire, water damage, and cladding risks. Professional indemnity is one of the bright spots. Capacity is up and we're starting to see broader fire safety and cladding provisions return, albeit on cautious case-by-case basis.
Now moving across to Europe, construction activity is shifting more towards infrastructure, energy transition, data centers, and retrofit. Labor shortages and persistent cost pressures continue to influence delivery risks. But overall, the insurance market remains stable, with room for improvement in coverage, especially as reinsurance conditions have become more favorable heading into 2026.
In the Middle East, momentum is still strong. Major infrastructure and city building programs in the GCC remain central. What's changing is the discipline. We're seeing more structured phase gating and more emphasis on bankable and DSU security packages too along finance. The insurance market remains competitive for clients who engage early and provide robust risk information.
So what do we expect in 2026? Looking ahead, the outlook for GB and Europe is one of cautious optimism. Forecast points to return to growth in Europe construction output, led by infrastructure and renovation, while other sectors remain mixed. The typically support stability market conditions with opportunities for further softening where competition is strong and performance is good.
From a capital standpoint, the 2026 reinsurance renewal reflected a buyer's market. Record availability, capital, benign catastrophe experience in key regions, and more flexible structures. This should support capacity and keep down pressure on a risk-adjusted pricing. The caveat-- large engineering risks and Nat Cat exposed projects will still see disciplined underwriting.
In the Middle East, 2026 is shaping up to be a transition from scale to performance. A lot of major programs are moving from visionary master plans to measurable delivery with some rescoping, some timelines reset, and a much greater focus on execution. Rewards projects that can demonstrate delivery, certainty, resilience, supply chains, and solid site controls.
The key issues for construction and principals. Three big themes stand out in 2026. Number one, cost, inflation, and labor. General inflation may have eased, but construction costs remain high. And labor shortages, especially in specialist trades, continue to influence tender risks, programs certainly, and severity.
Number two, regulations and liability in Great Britain. The Building Safety Act is reshaping liability models. PI conditions have improved, but Legacy Exposure to risks and cladding-related issues still require careful disclosure and contracts oversight.
Number three, natural catastrophe and climate. Recent flooding and severe weather in Europe highlights how exposures are changing. The builders risk, this means site protection, water management, and temporary works control are more important than ever, especially for securing DSU terms. And in the Middle East, the rising complexity of programs means projects supported by strong engineering and aligned with lender expectations are securing smoother placements.
Capacity, appetite, and pricing in 2026. Here's what buyers should expect. Capacity and appetite, overall, capacity remains plentiful, with broad participation and increasing line size. MGAs and new markets are adding competitive pressure.
Complex tunneling, power, and Nat Cat-exposed projects will still need clear marketing strategies and early engagement. Pricing and terms. Where risks are strong and loss experience is favorable, expect stable or slightly softening pricing. But we should still expect firmness, where water damage exposure is higher, where occupancies are changing, or where geopolitical risks is a factor.
Middle East details. As giga projects get rescheduled or rephased, package size and DSU profiles will shift. Insurers will reward credibility, phase gating, robust commissioning plans, and transparent critical path management.
Practical tips for successful 2026 placements. Two practical tips stand out. One, engage early. In 2026, early engagement will be a major differentiator. Insurers are rewarding early high-quality submissions, especially where they include clear insight into construction methods, water ingress planning, commissioning strategy, and supply chain resilience.
Number two, use global market reach. With new entrants and varied appetites across GB, Europe, and the Middle East, the right placement strategy is often global. Clients benefit most when brokers align each project with a market that offers the strongest appetite, not just the most familiar hub.
This global approach leads to broader coverage, stronger competition, and more favorable terms. Thank you for joining me for this episode of The marketplace insight podcast, and I look forward to seeing you next time.
SPEAKER: Thank you for joining this podcast from Willis, a WTW company featuring the latest thinking and perspectives on people, capital, climate, and risk in the construction industry. For more information, visit wtwco.com.
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