As global geopolitical events continue to impact today’s interconnected economy, the construction industry is experiencing downstream effects that extend beyond jobsite logistics and material availability.
Specifically, geopolitical events can influence the insurance marketplace supporting the construction industry. As these events continue to unfold, construction firms should expect changes in insurance pricing, coverage terms, and coverage availability in the near future.
At EHD, we’re following this situation closely and monitoring any changes to the insurance marketplace. In this article, we’re sharing the key insurance-related impacts business leaders should be aware of:
1. Rising Claim Severity May Elevate Insurance Costs
The increases in material, fuel, and labor costs experienced across the construction market today can also impact claim severity. Property losses, builders risk claims, equipment damage, and liability losses can become more costly to settle when replacement costs and repair times increase. As claim severity rises, insurers can require higher premiums to account for larger payouts, deductibles may increase to limit insurer exposure, and some carriers may become more selective when writing construction policies.
2. Supply Chain Uncertainty Can Increase Builders Risk and Exposure
Geopolitical events have added to supply chain uncertainty, leading to delays and extended project timelines. From an insurance perspective, longer project durations increase exposure to theft and vandalism, weather-related losses, and soft costs such as interest, lost income, or contractual penalties. Many insurance policies include coverage limitations on delay-related losses, particularly when delays stem from supply chain disruptions. As a result, we’re recommending our clients review their contracts for delay-in-completion exclusions and soft cost sublimits.
3. Higher Fuel and Transportation Costs May Affect Auto and Equipment Insurance
Rising diesel and transportation costs can increase fleet utilization, create longer haul distances, and require heavier use of insured vehicles and heavy equipment. Insurers may respond to these changes with increased auto liability and physical damage premiums, tighter underwriting on fleet safety programs, and greater scrutiny of equipment storage and security practices. To combat these pressures, we’re recommending our construction clients reinforce driver safety programs, implement telematics, and tighten equipment security controls to remain attractive to carriers in a tightening market.
4. Economic Uncertainty Can Shift Carrier Risk Appetite
Periods of geopolitical uncertainty can cause insurers and reinsurers to reassess capital deployment. When uncertainty rises, carriers may reduce capacity on large projects, excess and umbrella layers can become more expensive, and certain project types or geographic regions may face restricted terms. This can lead to coverage gaps or last-minute changes during policy placement or renewal. Construction firms should consider beginning insurance reviews earlier to increase their chances of negotiating the strongest policy possible.
EHD Is Here to Help
As geopolitical risks continue to unfold, so will their impact on construction insurance programs. At EHD, we are actively monitoring market conditions, underwriting trends, and carrier response to this evolving situation. Our team is here to help clients navigate these challenges, identify emerging risks, and structure insurance solutions that support long-term project success.
If you have questions about how these trends may affect your insurance program or upcoming projects, we encourage you to reach out to your EHD representative to start the conversation.
