The construction insurance industry is entering a transformative phase as we head into 2025. Economic shifts, including fluctuating interest rates, have impacted project timelines, while technological advancements are revolutionizing safety and efficiency. At the same time, the focus on holistic risk strategies is gaining momentum, with insurers and brokers collaborating more closely with clients to address challenges at every stage of a project.
Tyler Townsend (pictured), national construction practice leader at Hub International, shared insights with Insurance Business on the key trends and strategies set to define the construction insurance landscape in 2025.
Townsend anticipates that, in 2025, the construction insurance industry will continue to prioritize insurtech solutions designed to enhance worker safety and efficiency. Among these advancements, wearable technologies like smart helmets, vests, and sensors are expected to continue to play a significant role. These devices monitor workers' movements, detect signs of fatigue, and send real-time alerts to supervisors, helping to prevent accidents and improve on-site safety.
Additionally, Townsend noted that the use of drones is becoming increasingly prevalent. These aerial tools provide detailed imagery and real-time updates, allowing for more effective progress tracking and hazard identification on construction sites. However, Townsend cautioned that an increased reliance on technology doesn't always yield better project outcomes. Overuse or excessive dependence on digital tools can sometimes become counterproductive.
“A lot of tech companies are introducing brand new, shiny tools. Some of them are amazing,” Townsend remarked. “But I have noticed an overflux in the market.” He continued, “We really need to carefully evaluate these technologies to ensure they’re practical for our clients and genuinely support the successful completion of their projects.”
With this year being one of the most devastating nat cat periods on record, it’s safe to say the construction industry has faced widespread disruptions, highlighting the growing need for proactive risk mitigation strategies as the industry moves into 2025.
“Unfortunately, the summer of 2024 will probably go down in the books as the largest loss season in Canadian history. Models have shown 2024 losses approaching $8 billion,” confirmed Colin Wight, senior client advocate, construction at WTW.
This year’s losses have impacted the construction industry in several ways:
“No projects are immune from damage and loss events, no matter where you are in this country, so it’s really important that clients, owners, and developers review their force majeure clauses and their relief event clauses in their contracts, and understand how deductibles apply,” Wight explained.
Townsend echoed a similar sentiment, emphasizing that the lessons learned from this year's natural catastrophe devastation highlight the need for the 2025 construction sector to prioritize enhanced communication with clients.
“Instead of just securing insurance and moving on, we’re really communicating with our clients to conduct a holistic 360 review. This includes understanding what policies are in place, identifying potential gaps, and ensuring those gaps are communicated to our clients,” Townsend shared. "It's about making sure you're helping your clients in every single facet, as opposed to just taking a transactional approach.”
Want to learn more about what’s on the horizon for construction insurance in 2025, check out IBTV’s latest construction power panel here.
