2025 Construction Risk Management Conference

Construction industry market outlook

*This article was originally written by our North American colleagues for a U.S. audience. We have shared this article for informational purposes only as it may be of interest to our global clients. Please speak to your local office contact to further discuss any of the points raised in this article.

1. 01

   Market update

   The construction insurance market is being shaped by various factors, including changes in construction operations, social inflation, and technological advancements. It is noted that changes in construction operations can significantly impact insurance costs, particularly in excess and umbrella coverage. Social inflation, nuclear verdicts, and plaintiff-friendly juries are driving up insurance costs, especially in the umbrella and excess markets. The use of technology, such as AI and telematics, is becoming increasingly important in managing and reducing insurance costs.

   Key trends in the construction insurance market include rate predictions for various insurance lines: General Liability is expected to be flat to +10%, Auto Liability and Physical Damage +8% to +20%, Worker's Compensation flat to +3%, and Umbrella and Excess coverage facing the greatest pricing challenges. The Builder’s Risk and construction property market is stabilizing, with a double-digit decrease in premiums for best-in-class risks. Mega projects are on the rise, with a focus on hospitals, stadiums, and airports. Technology integration is playing a bigger role in risk management and underwriting, with some carriers offering incentives for tech adoption.

2. 02

   Future of nuclear power

   A renewed momentum in nuclear energy has been driven by advancements in small modular reactors (SMRs) and significant legislative support. In Texas, the Texas Nuclear Advance Act has allocated $350 million to accelerate SMR deployment, boost nuclear manufacturing, and rebuild the domestic fuel supply chain ^[1]. This initiative has positioned West Texas as a likely site for early SMR installations due to its existing infrastructure and open landscape. Beyond traditional power generation, nuclear energy is being considered for powering data centers and maritime vessels, offering a stable, low-carbon solution amid rising energy demands and climate concerns. Kate Fowler, our Global Head of Nuclear, also discussed:

   • Regulatory frameworks have been identified as critical to progress, with bespoke licensing processes and stringent safety standards often slowing innovation.
   • Supply chain limitations and an aging workforce have added further pressure, highlighting the need for expanded capacity and skilled labor. Meanwhile, the U.S. economy has shown resilience through strong consumer spending and retail sales, even as consumer confidence remains low.
   • Despite economic uncertainty, spending behavior has continued to support growth. Political forecasts suggest a shift in congressional power during the 2026 midterm elections, with expectations of a loss of House majority and a potential Senate hold by the Republican Party.

   These developments reflect the complex interplay between energy policy, economic trends, and political dynamics.

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3. 03

   Data center construction insights

   The rapid expansion of data centers is being driven by increasing demand, pushing the limits of power supply and infrastructure. Innovative solutions such as small modular reactors and battery energy storage systems are being explored to address these challenges. Multi-story data centers are becoming more common due to land constraints and the need for high availability, but they present unique construction and risk management challenges. The quality and safety of data center construction are being prioritized through standard operating procedures, pre-qualification processes, and continuous oversight to mitigate risks. Key areas of focus include:

   • Managing the increased power requirements
   • Ensuring structural integrity for multi-story facilities
   • Maintaining high safety standards throughout the construction process.

   By addressing these challenges proactively, the industry is moving towards more efficient and reliable data center construction. Effective risk management strategies are being implemented to support this growth, ensuring that data centers can meet the increasing demands of the digital age.

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4. 04

   Managing burnout

   Burnout is being increasingly recognized as a chronic condition affecting many professionals, particularly in high-stress fields such as construction and insurance. There are many effective management strategies that can be implemented to mitigate its impact. Techniques such as physical activity, deep breathing exercises, positive social interactions, laughter, creative expression, and adequate sleep are being utilized to manage burnout. Fostering a supportive workplace culture is an effective tool that can help prevent and address burnout among employees. It’s reassuring to see that conversations about mental health and burnout are being normalized, helping organizations to reduce the stigma and increase support within the workplace. By implementing these strategies, organizations can create a healthier work environment and improve employee well-being. Key aspects include promoting a culture of support, encouraging work-life balance, and providing resources for mental health. These efforts are crucial in maintaining a productive and resilient workforce.

   A comprehensive suicide prevention initiative has been introduced to address the disproportionately high suicide rates in the construction industry. A program called IBEAM (Ideal Body Environment Mind) has been developed through a collaboration between a national nonprofit SAVE and industry partners. This initiative has been structured to include executive, supervisor, and workforce-level training modules, ensuring that all organizational tiers are engaged. A holistic approach has been emphasized, with leadership commitment, cultural change, and accessible resources identified as essential components. The importance of appropriate language in reducing stigma has been highlighted, with terminology around suicide being reframed to foster empathy and understanding.

   Certification through IBEAM has been designed to create a visible support network, enabling trained individuals to be recognized as mental health allies on job sites. The program has also extended its reach beyond the workplace, involving family members and communities to build broader support systems. Additional resources, such as peer advocacy programs and online training, have been made available to reinforce awareness and response capabilities. Despite ongoing efforts, suicide rates have not declined significantly, underscoring the urgency of sustained action. Through education, open dialogue, and strategic partnerships, a foundation has been laid to improve mental health outcomes across the construction sector.

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5. 05

   Risk management in construction

   A structured, team-oriented approach is being emphasized for successful risk management in the construction industry. Key factors include:

   • Early and thorough preparation
   • Effective communication and team collaboration
   • The use of data analytics and benchmarking is being utilized to optimize risk management and insurance strategies
   • A comprehensive and early submission process with data-driven tools enhancing the submission process
   • Starting the renewal process well in advance ensures a thorough submission, and using data to demonstrate strengths influences underwriters' decisions
   • Continuous improvement, transparency, and proactive addressing of potential issues are being encouraged, with leadership engagement being vital to safety and risk management processes
   • Customized risk assessment tools and data analytics are being used to address specific loss exposures and mitigate risks.
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6. 06

   Builder's Risk insurance strategies

   Builder's Risk insurance is recognized as a critical component in construction projects, with several key factors being identified as crucial for maximizing insurance coverage and minimizing disputes.

   • Proper documentation and immediate action are being emphasized as essential in the event of a claim, with the first few days following a loss being particularly critical.
   • The definition of "occurrence" in Builder's Risk policies is understood to significantly impact claims and deductibles.
   • Phasing in construction projects is introducing complexities in insurance coverage and claims handling, making it necessary to have tailored endorsements for complex projects.
   • Clear communication channels between brokers, carriers, and contractors are being established to structure policies effectively.
   • The role of independent adjusters is being acknowledged as vital in assessing damages, although they have no authority to make coverage decisions. By understanding these complexities and taking proactive measures, the construction industry can better navigate the challenges associated with Builder's Risk insurance.

Footnote

1. Governor Abbott Names Shaffer Director Of The Texas Advanced Nuclear Energy Office’, Office of the Texas Governor, September 2025 Return to article undo