UK construction firms have been urged to strengthen their risk management practices in response to rising insurance challenges triggered by geopolitical tensions and global supply chain volatility.
A report by QBE, Trade tensions and the construction sector: Navigating supply chain disruption, produced in partnership with Control Risks, outlines how escalating tariffs and international trade disputes significantly affect access to key construction materials. These disruptions, in turn, increase insurance exposures across the construction sector.
Steel, aluminium, timber and copper saw price surges driven by geopolitical factors, with US tariffs on Canadian imports and trade disputes with the UK among the main contributors.
Higher raw material values led to inflated project sums insured under builder’s risk and contract works policies, raising the potential cost of claims and demanding more precise valuations from insured parties.
Prolonged delays in materials delivery and project timelines also placed additional pressure on delay-in-start-up (DSU) insurance, which covers financial losses caused by project interruptions. The report highlighted the importance of revisiting policy terms, coverage limits and timelines to ensure adequate protection amid a shifting risk environment.
In addition to material sourcing issues, construction firms faced mounting regulatory and environmental obligations, including the UK’s legally binding 2050 net-zero target. Insurers noted that increasing reliance on alternative and sustainable materials introduces new risks to underwriting, especially around quality assurance, long-term performance and non-standard construction methods.
Labour shortages, exacerbated by post-Brexit immigration changes and an ageing workforce, compounded the risk environment. Reduced access to skilled trades heightened the likelihood of construction defects, safety breaches and project overruns, all of which directly affect employers’ liability and professional indemnity insurance.
QBE emphasises that the evolving landscape requires a more strategic engagement with insurance providers. It encourages businesses to work closely with brokers and underwriters to stress test coverage, incorporate risk engineering and consider specialist policies that address supply chain risks.
The insurer also noted that rising complexity in project delivery may prompt interest in captive insurance arrangements, which allow firms to retain certain risks and tailor coverage more closely to their operational profile. The UK government’s July 2025 proposal to reform captive insurance and insurance-linked securities (ILS) frameworks could support this trend, although changes are not expected to be implemented until 2027.
Neil Fleming, UK construction & engineering portfolio manager at QBE, said the combination of supply chain volatility, inflation, workforce constraints and sustainability pressures presented a “complex risk landscape” for the sector. He stressed that early insurer engagement and tailored risk solutions would be key to ensuring project continuity and financial stability through 2025 and beyond.
