Construction is one of Canada’s largest employment sectors and is seeing unprecedented growth in infrastructure projects. With that growth comes increased risk, and companies are reaching for efficiency wherever they can.
That means technology, such as software for onboarding manpower, digital platforms for certifying forklift operators, and third-party systems for handling payroll and procurement. But with those tools come vulnerabilities.
At least one expert believes this sector has yet to grasp the extent of cyber risk their operations now hold. It’s a significant opportunity for brokers.
“A lot of these construction companies don’t believe that they have a cyber exposure,” said Nathan McCabe, Canada professions practice leader at CFC. “Yet when they’re utilizing third-party software and portable fund transfers, which is one of the largest loss leaders we’re seeing in terms of claims frequency.”
Once a manual-heavy trade, construction is shifting under the weight of digital transformation. Scanners, automated inspection tools, and advanced project management systems are the new normal, but the insurance world hasn’t kept up.
“There are gaps now growing where technology isn’t being addressed in your traditional coverage lines,” said McCabe. “If you are utilizing technology and you're responsible for that technology, there's that potential for financial loss to occur.”
As contractors evolve into providers of digital services, stepping into liability territory that no bolt-on policy is designed to cover, according to McCabe.
So why haven’t insurers been quicker to adapt? Part of the issue is who’s writing the policies. “Most GL markets have been quite happy to offer just a bolt-on cover, very skinny in terms of what the exposure is offering,” McCabe explained.
“Many of these policies are being written by casualty or general liability underwriters, not necessarily professional liability underwriters.” The result, he added, is often coverage with low limits and narrow definitions that don’t reflect the complexity of today’s projects.
CFC has responded to this gap by launching a standalone contractor’s E&O policy that offers higher limits and broader coverage. The solution combines E&O with cyber, pollution liability, and professional services protection in one policy.
“Before, a lot of construction companies would just brush (cyber risks) under the carpet,” McCabe said. “Now we’re trying to protect the professional side, and we feel there’s a need to incorporate that cyber element.”
Tech’s entanglement with construction is only increasing. From generative design software to AI-powered CAD tools, contractors are adopting platforms that blur the line between service provider and tech company.
McCabe is seeing this trend accelerate. “I downloaded an AI room interior design app the other day,” he told Insurance Business. “If a contractor uses that to get the idea for a design, whose IP is it?”
That kind of risk can catch companies off guard. So, what can brokers do? Ask better questions, for one: are clients using technology as part of their services? Do they have in-house designers, engineers, or architects?
“Anything where there is a professional-led service… is an area they should be looking to explore for coverage,” McCabe pointed out.
“Most people traditionally only buy the covers that they see in the contract and not the exposures that they actually carry. The CCDC (Canadian Construction Documents Committee), where they’re implementing Professional Liability more frequently, is certainly helping to raise that visibility.”
Overall, the insurance industry needs to make a fundamental shift in how coverage is structured as the construction sector evolves. Bolt-on covers for professional liabilities don’t adequately address the risks for modern contractors, according to McCabe.
“If we are going to keep up with the evolution of a lot of these industries, we need to ensure that the wordings are fit for purpose,” he said.
