Iran war raises long-term risks for Asia builders' insurance gains

Supply chain disruption and energy volatility could push premiums higher by 2027.

Insurance costs for construction projects across Asia are falling as competition intensifies, but the war in the Middle East is creating risks that could reverse the trend by late 2026 or early 2027, analysts said.

“Whilst it is definitely an improving marketplace and a better time to be a buyer, rates aren't in the kind of freefall seen in some of the property space or some of the specialised energy and power space,” Chris Bickerstaff, Asia construction leader at Marsh LLC, told Insurance Asia.

Insurer appetite and underwriting capacity increased through 2025, but the war is already disrupting supply chains and delaying some investment decisions, according to Marsh.

Bickerstaff said construction insurance pricing in Asia is improving more gradually because the market remains specialised, with fewer lead insurers and tighter underwriting discipline than other commercial insurance lines.

Coverage is also broadening as insurers compete for business linked to large infrastructure, artificial intelligence, and data centre projects across Asia.

“For a lot of insurers and brokers alike, construction is seen as a growth engine,” Bickerstaff said by telephone. “We see a lot of investment in construction, announcements of insurers building out their construction teams, or returning to construction if they had exited during the hard market.”

Research and Markets Ltd. expects the construction project insurance market to grow from $8.4b in 2025 to $8.9b in 2026 before reaching $11b by 2030.

However, the US-Israel war on Iran is beginning to change construction risk profiles globally.

Vincent Banton, head of construction and infrastructure for Asia at Aon Plc, said the Asia-Pacific construction markets remain highly exposed to the war’s indirect effects even though most projects are far from the war zone.

Energy price volatility, shipping disruption, logistics delays, and uncertainty around project execution are increasingly feeding into construction risk calculations, he said.

The Strait of Hormuz remains a key concern because most of Asia’s oil and liquefied natural gas imports pass through the corridor, according to a March report by Oliver Wyman, LLC.

The consultancy said Brent crude prices rose about 25% between late February and mid-March, whilst European gas futures climbed 56% and jet fuel prices surged 58% within two weeks.

Major shipping companies including A.P. Møller – Mærsk A/S rerouted vessels around the Cape of Good Hope, extending Asia-Europe transit times by up to 15 days.

Bickerstaff said some of the biggest risks sit deeper within construction supply chains, where contractors often lack visibility over secondary and tertiary suppliers. “Clients are often given the illusion of choice when it comes to supply chains,” he added.

Marsh uses a supply chain assessment platform called Marsh Centrisk to map these exposures. After reviewing one client’s supplier network, the company found that 86% of its supply chain had exposure to war zones.

“Aon’s credit and supply chain insights emphasise that financial strain further down the value chain can surface earlier, as contractors and suppliers absorb rising costs or face cash-flow pressure,” Banton said in an emailed reply to questions.

He warned that rising costs and cash-flow pressure deeper within supply chains may increase counterparty risks, weaken labour availability, and slow large construction projects across the region.