Navigating the Biggest Risks in the Construction Industry

The construction industry has always been a risky business – it comes with the territory - but, in 2024 and beyond, a challenging climate of increased material costs, labour shortages and tough economic conditions means most construction bosses in the UK have growing concerns about their biggest risks. Interest rates, inflation and financing costs are all causing a headache for construction leaders, but chuck the rise of liability claims into the mix, and managing and mitigating risks can be a huge and daunting task for businesses in the industry.

Let’s dive into the top insurance risks builders, developers and contractors face right now – and why it’s more important than ever to have the right safety nets in place.

Supply chain chaos

Remember when delays were just frustrating? Now they’re deal-breaking. Supply chain issues are wreaking havoc on construction timelines, pushing projects past deadlines and over budget. Materials like steel, timber and concrete are harder to source, and fluctuating costs are putting pressure on profit margins.

From an insurance perspective, this has made contract works and delay-in-start-up policies vital. Insurers want precise timelines and contingency plans – easier said than done in a world where a single shipment delay can spiral into months of setbacks.

Labour shortages

The construction industry is in a recruitment rut. Skilled workers are in short supply, which not only impacts project efficiency but can lead to safety risks. There’s a danger of less experienced workers filling roles too quickly, potentially leading to accidents or quality issues.

Employers' liability insurance is more crucial than ever. Insurers are scrutinising training programmes and safety measures, making it essential for construction firms to demonstrate a proactive approach to workforce development.

Climate change and extreme weather

Mother Nature is not playing around. Flash floods, heatwaves and unpredictable storms are making site planning a logistical nightmare. Projects in flood-prone areas are at greater risk, in the UK, and even the best-laid plans can be washed away with the next heavy downpour.

Construction insurance policies are adapting, with more emphasis on weather-related delays and damages. Site surveys now often include climate risk assessments, so if you’re building on a floodplain, your premiums may reflect that risk.

Rising cyber risks

Wait, cyber risks in construction? Absolutely - as the industry embraces smart technology and digital tools for project management, the threat of cyberattacks is rising. Imagine ransomware locking up your BIM (Building Information Modelling) systems or hackers targeting sensitive client data.

Cyber liability insurance is no longer optional; it’s essential. And as construction sites get smarter, policies need to evolve to cover these vulnerabilities.

Inflation and rising costs

Inflation is biting across the board, and construction isn’t immune. Rising costs for materials, fuel and labour are hitting budgets hard, and underinsurance is a growing problem. If a project is insured for pre-inflation costs, businesses could face significant out-of-pocket expenses in the event of a claim.

To mitigate this, insurers are advising clients to regularly review sums insured and ensure policies are in line with current costs. It’s a tedious process, but it’s far better than being caught short when you need cover the most.

Health and safety in a post-COVID world

While the pandemic feels like old news, its ripple effects still linger. Increased focus on health and safety regulations – from site hygiene to worker wellbeing – is reshaping how construction firms operate. Non-compliance with these evolving standards can lead to claims, fines and reputational damage.

Public liability and employers' liability policies are under the microscope, with insurers looking closely at how firms manage risk in a post-COVID world.

The bottom line

Navigating these risks isn’t easy, but that’s where expert advice (and the right insurance broker!) comes in. At Ascend Broking, we’re helping construction firms build resilience, ensuring they’re covered for today’s risks and ready for tomorrow’s challenges.

Whether it’s bespoke liability cover, cyber insurance or protecting against supply chain disruptions, having the right policy in place can mean the difference between a minor setback and a major disaster – every day, every project.

Other blogs which may be of interest:

Insolvencies in the UK - Trends, impacts and trade credit insurance

Take care over ESG claims

Got questions about your construction insurance? Let’s chat – it’s what we’re here for! Call Ascend on 01245 449060, or email Stuart.Belbin@ascendbroking.co.uk.