Local insurers to underwrite $8.25b worth of construction projects by 2018

Majority of the projects will be in emerging markets.

As Asia’s insurance hub, Singapore-based firms are expected to underwrite US$4.5 billion worth of construction projects this year, a 22% increase over the past five years, and set to rise to US$6.5 billion by 2018.

According to AIG, more than 60% of global construction is going to take place in emerging markets by 2025, and construction in these emerging markets is now outpacing developed markets for the first time.

This figure not only shows the increasing number of projects being undertaken across Asia, but also highlights the multiple risks involved in these projects.

“Today projects involve a global supply chain, where materials and equipment are sourced all over the world and this inherently increases the risk. When the complexity of multiple jurisdictions is introduced, different legal exposure, contractual obligations, tax and compliance issues, and cultural norms such as work safety have to be taken into consideration,” said Rudi Spaan, AIG’s Head of Broker & Client Management.