This article was produced in partnership with Victor Insurance
Markets rarely stop talking about uncertainty. Whether the subject is tariffs, taxes, political change, or shifting policies, conversations about returns and risk almost always circle back to what remains unknown. In construction and design, that uncertainty is amplified by forces pressing on the industry from every direction: higher borrowing costs, supply chain instability, labor shortages, intensifying climate events, and regulations that are shifting faster than many firms can adapt.
For insurance professionals, this turbulence is not only influencing demand for coverage but also altering the shape of the exposures themselves. “The kinds of claims we’ll see in the next decade are going to look different from the ones we’ve spent the last three decades preparing for,” says Frank Musica, Risk Advisor at Victor.
AI is beginning to influence design decisions, plaintiff lawyers are testing new negligence theories tied to climate events, and contractors are being forced into guaranteed price contracts without any visibility into material availability and cost. As Annette LeGrant, A&E Growth Leader notes, that convergence “is pushing the industry to think more deeply about how risk is shared, how it’s priced, and how brokers and underwriters prepare clients for scenarios that don’t yet exist.”
It may be worth flipping the script. Instead of dwelling on uncertainty, the sector may need to focus more sharply on what can be counted on, because some pressures are not passing trends but structural realities.
One of the most significant shifts influencing underwriting and claims is technological. The construction sector is now embracing automation, robotics, modular construction, and tools like building information modeling (BIM) and artificial intelligence. These innovations are reshaping workflows, compressing project timelines, and creating new risk profiles.
“Contractors who are using technology are going to see their profits go up,” Musica says. “They’re having a tough time adjusting, but it’s inevitable, and it’s a great opportunity.”
For architects and engineers, technology is enabling new advisory roles. The AIA Trust has launched a new climate screening service, known as the 'Climate Factsheet' that helps firms project how a site might change decades into the future, supporting more resilient design decisions and deeper client relationships.
Rising material costs are pushing new considerations into contract language. Contractors often commit to guaranteed maximum prices without knowing whether certain materials will even be available months later. “Helping design professionals understand the need for contractors to have material price escalation clauses in their contracts keeps the industry focused on productivity and reduces the risk of disputes,” Musica explains.
Contracts are also key to managing broader project exposures. Clearly defined scope and design documents help prevent misunderstandings, and avoiding the transfer of disproportionate risk to one party reduces downstream litigation. Progressive design-build models, which bring owners, design teams, and contractors together early, are reducing adversarial dynamics and embedding risk management into projects from the outset. “You want things to go right from the beginning,” Musica says. “Progressive design-build helps make that happen.”
Victor’s decades of claims data offer a roadmap for anticipating where exposures are most likely to occur. Historical patterns show that economic downturns tend to drive a rise in claims frequency, often linked to cost pressures and disrupted supply chains. Bodily injury claims, particularly third-party ones, are also increasing, driven by more aggressive legal strategies and larger verdicts. “You can’t predict those outcomes, but you can warn policyholders they may need higher limits,” Musica says. “A single large claim can wipe out their assets.”
Certain project types consistently pose outsized risk. “Residential has always been an issue,” Musica notes. “The percentage of claims costs from multifamily condo projects is so high that you almost can’t charge enough for the coverage.” High-tech projects like hospitals, laboratories, and data centres also carry significant severity risk.
LeGrant emphasizes that this data is valuable for both sides of the insurance equation. Underwriters use it to align pricing with exposure, while brokers can draw on it to help clients understand why pricing reflects their specific project mix. Victor’s publication From Risk to Profit distills these insights, helping policyholders and their brokers track where risk is intensifying and where mitigation efforts should be focused.
Victor’s risk management matrix, a four-part framework for identifying, assessing, responding to, and controlling project risk, is another tool that brokers and underwriters can use together. “When brokers talk with clients or prospects, they can use it to ask what risks are inherent in a project, in this place, at this time,” Musica says. “The more you understand about the client and their goals up front, the better off you are.”
Looking ahead, both Musica and LeGrant caution that new exposures are already forming. Climate change may drive an increase in third-party property damage and bodily injury claims, particularly as plaintiff lawyers pursue new theories of negligence. Rising litigation costs and talent shortages will keep pressure on claim severity and challenge pricing discipline.
In this environment, price competition alone is a dangerous strategy. “Some competitors underprice risk to win business,” LeGrant warns. “But clients may not get the right coverage or a carrier that is still there when it’s time to pay a claim.” A long-term partnership with an insurer that understands the industry, he says, is far more valuable than a short-term discount.
The opportunity lies in building certainty where it matters most. That is, through better data, smarter contracts, proactive conversations, and deeper collaboration. In a sector where volatility is a given, that certainty may prove to be the ultimate competitive advantage.
