Construction insurance gaps threaten project financing

Zurich said lenders may cut commitments when adequate cover is unavailable.

Insurance availability is becoming a key factor in determining whether major construction projects can secure financing.

Zurich Insurance Group’s Beyond 2030: The Future of Construction, found that insurers are playing a growing role in assessing project viability as construction risks become more complex and interconnected. 

It warns that projects that cannot obtain adequate insurance cover may struggle to attract funding from lenders and investors. 

Zurich said extreme weather and natural catastrophes are the most severe risks facing the construction sector over the next five years, scoring 6.2 out of seven on its risk severity scale. 

Financial market vulnerabilities and labour shortages followed closely, highlighting the growing range of exposures insurers and project owners must manage. 

Kelly Kinzer, Zurich's global head of construction and surety, said increasingly complex projects are being delivered in a more volatile risk environment and under tighter timelines. 

She said insurability has become a critical consideration because projects that cannot secure insurance are unlikely to obtain financing. 

The report noted that insurance is becoming an early indicator of project resilience, with insurers identifying potential risks during project planning, site selection and procurement stages rather than after construction begins. 

Where insurance cover is unavailable, restricted or prohibitively expensive, lenders may revise financing terms, delay funding or reduce their commitments.