AGCS: 10 pandemic-recovery construction risk trends

No. 1: The changing construction business landscape

“Despite a strong recovery the industry is still faced with both short- and long-term challenges in overcoming the shortage of key equipment and materials, the spike in procurement costs, longer lead times, schedule and cost overruns, compromised supply chains, skilled labor shortages, ever-changing workplace protocols, and increased competition for limited work.”
— Managing the new age of construction risk, November 2021, Allianz Global Corporate & Specialty

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No. 2: Infrastructure project backlog

“Any new investments in large infrastructure projects will come in addition to the numerous projects that had already been scheduled for 2020 but were otherwise postponed to 2021 or 2022 due to Covid-19 restrictions. This will create significant business potential for, but also require capacity and expertise from, the construction and engineering insurance markets.”

— Managing the new age of construction risk, November 2021, Allianz Global Corporate & Specialty

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No. 3: Sustainability demands drive change

“In order to meet carbon reduction, new materials and construction methods will need to be introduced across the market in relatively short periods of time. This will bring an increased risk of defects or unexpected, safety, environmental or health consequences. For example, as a sustainable and cost-efficient material, the use of timber in construction has increased in recent years.”

— Managing the new age of construction risk, November 2021, Allianz Global Corporate & Specialty

(Photo: lalanta71/Shutterstock)

No. 4: Upscaling clean energy presents challenges

“The global drive to reduce greenhouse gas emissions has seen huge investments in renewable energy, in particular wind and solar. At the same time, new low-carbon technologies are being developed, such as battery storage and hydrogen power, that will need to be massively scaled up to meet international emission reduction targets under the Paris Climate Accord.”

— Managing the new age of construction risk, November 2021, Allianz Global Corporate & Specialty

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No. 5: Hydrogen may emerge as a new energy sector

“Achieving net zero will also require huge investment in entirely new sources of power, storage capacity and distribution infrastructure. For example, a reliance on renewable energy will require large scale battery storage capacity to smooth out supply, while hydrogen gas is being touted as an alternative to natural gas. Green hydrogen — produced using renewable energy — could provide a solution for hard-to-abate sectors such as the steel, petrochemical and cement industries, as well as be used to power long distance transport.”

— Managing the new age of construction risk, November 2021, Allianz Global Corporate & Specialty

(Photo: wladimir1804/Adobe Stock)

No. 6: Modular construction is growing

“The size of the global modular construction market is projected to grow from $82 billion in 2020 to $109 billion by 2025, at a combined annual growth rate (CAGR) of 5.75%. In terms of value and volume, permanent modular construction is estimated to dominate the market and steel is tipped to be the fastest-growing market segment.”

— Managing the new age of construction risk, November 2021, Allianz Global Corporate & Specialty

(Photo: benik.at/Shutterstock)

No. 7: Pandemic increases claims and costs

“COVID-19 restrictions have increased the cost of some large machinery claims, while material inflation, shortages of labor and supply chain disruption may be storing up problems for the future.”

— Managing the new age of construction risk, November 2021, Allianz Global Corporate & Specialty

(Photo: ETAJOE/Shutterstock)

No. 8: Extreme weather risks

“Construction sites need to give more consideration to the impact of extreme events, such as wildfires, flash flooding and landslides, in their risk assessments moving forward.”

— Managing the new age of construction risk, November 2021, Allianz Global Corporate & Specialty

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No. 9: Water damage

“Water damage continues to be a major source of loss during construction, in part due to changes in construction methods and materials in recent years. A faulty or incorrectly-installed connector or pipe can cause costly damage on a site, especially in high-rise buildings and projects nearing completion.”

— Managing the new age of construction risk, November 2021, Allianz Global Corporate & Specialty

(Photo: Shutterstock)

No. 10: Digitalization of construction creates cyber exposures

“Cyber risks related to construction projects can encompass a broad range of perils, ranging from malicious attempts to gain access to sensitive data, to disruption of project site control and associated theft, to supply chain disruption to potential corruption of project design data, resulting in delays and ultimately reputational risk for parties involved.”

— Managing the new age of construction risk, November 2021, Allianz Global Corporate & Specialty

(Photo: ipopba/Adobe Stock)