As the construction industry navigates emerging risks and evolving opportunities, this episode explores how these dynamics are reshaping insurance and surety strategies worldwide. Hosts Tariq Taherbhai and James MacNeal unpack the latest insights from Aon’s 2025 Global Construction Insurance and Surety Market Report, offering expert perspectives on market trends, regional dynamics and strategic recommendations for navigating today’s complex risk environment.
Key takeaways:
Experts in this episode:
Tariq Taherbhai — Chief Commercial Officer, Construction and Infrastructure, Aon
James MacNeal — Global Industry Specialty Leader, Construction and Infrastructure, Aon
Key Moments:
[1:38] Three key trends driving insurance and surety markets for the construction industry
[2:58] What’s driving construction trends around the world?
[5:17] Technological innovation is at the forefront of everything.
[7:58] How the market is shaping up for construction liability.
[10:09] The global surety market is projected to grow at about 5 percent annually for the next few years
Additional Resources:
2025 Global Construction Insurance and Surety Market Report
Soundbites:
“There seems to be an insatiable build going on in infrastructure, energy, high-tech manufacturing projects – for example, data centers that are just expanding rapidly globally.” — James MacNeal
“Start early. Begin any insurance placement process as early as possible, especially if you have a complex, high-risk project. Underwriting timelines are lengthening due to increased scrutiny and demand.”
— James MacNeal
Tariq (00:00)
Hello everyone, my name is Tariq Taherbhai and I'm the Chief Commercial Officer of Construction and Infrastructure here at Aon. In today's On Aon episode, we're taking a look at the global construction insurance and surety markets.
Our new recently released report, the 2025 Global Construction Insurance and Surety Market Report, provides a nuanced and detailed look at how construction insurance and surety markets are evolving.
In the report, we cover in-depth the following four products: construction property, construction professional liability, construction casualty, and surety. And we do this globally. With me today to discuss all of this and lots more is James MacNeal, our Global Head of Construction and Infrastructure at Aon.
James (00:54)
Thanks for having me, Tariq.
Tariq (00:56)
James, what are some of the key trends shaping the global construction insurance and surety markets in 2025, and how are geopolitical and macroeconomic factors influencing these trends?
James (01:10)
There's currently three main market trends, Tariq. I think there's a cautious optimism for our clients. The market's in a softening cycle and we're seeing increased capacity really driven by insurer growth ambitions and it's really driving favorable conditions in most regions in the world.
The key growth drivers — there seems to be an insatiable build going on in infrastructure, energy, high-tech manufacturing projects, for example, data centers that are just expanding rapidly globally.
We're also seeing a lot of growth across many sectors of the construction industry in emerging markets like India and China. But we're not without our challenges. Natural catastrophes, macroeconomic volatility, labor shortages, and supply chain disruptions caused by trade disruption continue to pose very significant risks.
Tariq (02:04)
Very interesting. And so what I'd like to do now is maybe, James, if I may have you talk about some of the specifics from the report in each of the product areas. First, how are global trends and the increase in natural catastrophes affecting rates and capacity for construction property insurance in particular? And what are some of the regional differences?
James (02:29)
So globally, construction property insurance is generally stable. You've got sufficient capacity, though again, it's that natural catastrophe — Nat Cat as we call it — risks are really driving cautious underwriting and higher rates in regions exposed to it.
You've got obviously climate driven challenges. Economic losses from weather related disasters actually reached $368 billion in 2024 and that's really prompting insurers to tighten terms, especially in high risk areas like Florida, Southeast Asia and parts of Australia.
So really, alternative risk transfer solutions, parametrics are really gaining traction here.
Regional trends for construction property, North America, capacity is ample, but fragmented. A lot of insurers are very wary of Nat Cat exposure there. You've got tremendous growth driven by data centers, pharmaceutical facilities and infrastructure. But again, you're not without risk. Inflation and labor shortages are still really impacting policy terms.
Canada is a competitive market. There's a growing appetite for mass timber and sustainable construction. Though again, wood-framed projects face a lot of scrutiny.
EMEA, you've got stable and softening rates in the EU. Middle East markets are really growing despite the complexity. It's just sheer size of the construction projects going on in the Middle East. And then you've got flooding and reinsurance dynamics shaping some of the major economies in Europe, like Italy and Spain.
APAC, the market's softening overall, except Japan. Japan actually is entering a hard cycle, whereas you're seeing strong growth in India and China, really down to large scale infrastructure and tech projects being the key drivers there.
And Latin America, lots of infrastructure and renewable energy projects going on there but you've still got the underlying political and economic volatility along with Nat Cat risk. So that continues to influence pricing capacity.
Tariq (04:31)
Thank you for that thorough global and regional overview, James. Are there any themes that you're seeing across the globe? I appreciate that there are these regional differences, but are there any global themes that are worth calling out for our listeners?
James (04:49)
Yes, absolutely. Some regions more than others, but I think you can safely say for every region in construction property, technological innovation is at the forefront of everything as is sustainable construction. The demand for that, you're seeing evolving risk transfer mechanisms, and I mentioned ART, and these are really reshaping the insurance landscape. And insurers are increasingly focused on risk mitigation, data quality, and long-term resilience.
Tariq (05:18)
Excellent, excellent. Okay, let's maybe just move on then, if we may, to our next key product line being construction professional liability. I appreciate there has been change there as well. And so, if you would please, what changes are occurring in the rates and capacity for construction professional liability, which as I think — as we would all agree — had hardened previously over many years.
James (05:44)
I mean, in a nutshell, I'm delighted to say the market's stable as you say, Tariq. Professionals had its issues as a market in last few years, but I think globally you've got market stability, but with regional nuances. So really North America, Australia, parts of EMEA are going strong. Asia's maturing, but I think it's still, Professional is pretty nascent in Latin America.
Globally rates are pretty flat. But again, it's those high-risk projects, jurisdictions may see increases. You've got a lot of rising claims or retention, so claims inflation, and that's being driven by legal costs, social inflation, and some pretty large verdicts out there. You know, that's a real concern, particularly in the US. And so as a result of that, insurers are pushing for higher retentions to increase that, those rising costs. As I said, we're really seeing that in the US at the moment.
In terms of coverage and capacity trends, capacity’s ample for low risk and well- managed projects. But for those higher-risk or complex projects — for example, the mega projects or renewable energy — face much tighter underwriting scrutiny and more limited capacity. Insurers are increasingly vigilant about limiting aggregation and are really cautious about long duration projects.
In Professional, you're seeing a lot of focus on technology and environmental so there's a growing interest in coverage for technology-related exposures. For example, E&O for software providers and environmental related risk. And some insurers are offering broader terms, including cyber and pollution extensions, especially in the more competitive markets.
Tariq (07:27)
Well, I think the fact that insurers for this line of business are offering broader terms and the stability of the market, I know we'll be welcoming these to our clients, James, particularly given what they'd experienced previously. Moving on to now our third product, construction liability insurance, would love to hear your thoughts on the global market for this one.
James (07:52)
I think the best way I can sum up construction liability is that it's a competitive and a tiered market. The market remains competitive, especially for project-specific risks and commercial construction. But this two-tier market has also emerged where you're seeing higher rates and reduced capacity for the more challenged risk classes like heavy civil contracting and projects with poor loss histories.
In terms of regional dynamics in the US, it's all about auto liability rates rising due to large verdicts, whilst general liability and workman's compensation remain relatively stable. Excess liability capacity is tightening, especially for those higher risk sectors.
In EMEA mirror, rates are stable. I think we have sufficient capacity there, but insurers are continuing to really emphasise risk transparency and loss prevention.
I should call out that London market is key for all of our main product lines in construction, but never more so than construction casualty. And there continues to be really strong capacity and appetite in London for both international and North American construction risks. It's really there to support the large complex, long-duration projects. But again, those extended coverage terms are on the closer scrutiny.
Tariq (09:14)
Given just how many large and complicated projects that we are seeing from our clients, I know London continues to play such an important role for us and them as well. So thank you for commenting on that. And then last but definitely not least, Surety has a product so very important to our contractor clients in particular. Where do we expect to see growth in Surety and why?
James (09:42)
Definitely not least as you say Tariq, when you look at the potential growth trajectory of Surety, the global Surety market is projected to grow at about 5% annually for the next few years and potentially reaching about $30 billion by 2030. And that is again, it's driven by infrastructure, energy and water projects across key regions like US, APAC and Latin America.
Rates, capacity remains pretty stable globally. Capacity's ample, rates are staying relatively flat with underwriters increasingly focused on performance, credit quality and risk mitigation. I think an important call-out for Surety is regulatory and sustainability influence. So regulatory changes are really making Surety more attractive as an alternative to traditional bank guarantees and sustainability factors are increasingly being integrated into underwriting decisions.
Just call out a couple of regional highlights. North America maintains its position as the strongest and most mature Surety market, again, fueled by loads of public infrastructure and lots of inflation-driven project growth. APAC, we're seeing a very rapid maturation of that market, especially in India and China. And there's a growing use of both commercial and construction guarantees in those countries.
Tariq (11:11)
Great. Thank you, James, very much for that really thorough and interesting overview of our four key global product lines. I guess really to sum it up, I would love to hear your thoughts on how our clients can best navigate the complexities of this market considering the major growth areas and sectors and construction. So James, what advice would you give to our clients to help them through this ever evolving market?
James (11:42)
For me, Tariq, I'd reference the six strategic recommendations from our global reports navigating the current environment section.
So firstly, start early, begin any insurance placement process as early as possible, especially if you have a complex, high-risk project. As underwriting timelines are lengthening due to increased scrutiny and, frankly, demand. Underwriters are seeing a lot of construction business at the moment.
Secondly, really make sure you evaluate your contract structures to ensure any contract you sign up to has clearly defined insurance requirements and risk assumptions so you avoid any potential gaps in coverages for issues like delays, design flaws, or supply chain disruption.
Implement and document risk control so strong documented risk management measures really improve safety and regularly lead to more favorable insurance terms.
Use alternative risk transfer tools. Consider solutions like parametric insurance or captives to manage exposures that perhaps the traditional insurance market may not fully cover.
Adopt a pre- and post-loss framework, so prepare for potential claims with pre-loss planning.
Think about selecting your loss adjuster well in advance and design claims protocols and stress testing scenarios.
And lastly, but I would say very importantly, choose the right broker. Work with brokers who really understand construction risk and global insurance dynamics to help you have a tailored, responsive insurance and security program.
Tariq (13:25)
That's really good advice. Thank you, James. And thank you to everyone for listening. Again, really want to call out our recently released Construction Insurance and Surety Market report, which has all of this information in it and lots more. That's our show for today. Thank you all for listening. In the next few months, we'll have more episodes on risk capital topics. Until next time.