Technology risks becoming increasingly present in construction sector

Risks related to the increased use of technology are becoming increasingly prevalent in the construction sector, prompting insurers and brokers to update the way they provide insurance products to the sector. 

The construction sector, and contractors especially, are increasingly making use of software systems, building design programmes and hardware – such as drones – in day-to-day operations. 

This topic formed part of the discussion at Insurance Times’ latest TechTalk Live event – a roundtable held on 2 October 2025 in Manchester, in association with insurer Hiscox. 

Speaking at the event, Hiscox’s northern regional underwriting manager Dave Cargill said: ”There is room for innovation there on wordings, which have been pretty consistent across the market for a long time. 

“What we have noticed is that, for a lot of businesses [in the construction sector], there’s increasingly an overlap between what they do and what the technology risks that we write do. The risks can sit somewhere between a traditional contracting risk and a technology firm.”

Cargill added that while artificial intelligence (AI) technology was seeing more use in areas such as drafting health and safety plans or designing building parts, underwriting for this had not caught up in the construction insurance sector. 

Matt Didlick, vice president and professional indemnity leader at Marsh, added: ”AI is going to become a really tricky risk to underwrite because it’s so fast moving, almost similar to the cyber market when that first started emerging. There’s potential for a big claims landscape.” 

Massive efficiencies

Outside of AI, construction sector firms are making more use of technologies like drones to speed up the process of surveying and other work that may have previously required extensive scaffolding. 

While attendees to the TechTalk Live roundtable agreed that this provided “massive efficiencies” for construction sector firms, brokers warned that a lack of regulation around this area was creating new potential risks.

Ben Fielding, director at Graphene Insurance Brokers, noted: ”From the drone perspective, you can absolutely see the uses and I understand why they’re being used. But it’s almost like people are going to play with them in the back garden and then using them on site without any training, so I think there’s definitely a question around them.” 

The potential new risks around drones use are also emblematic of wider challenges in the construction sector, where lots of different contractors and sub-contractors can end up involved in a claim, with a lot of “finger-pointing” around which entities are liable. 

Didlick said: ”If a contractor gets a specialist drone guy in and then provides advice based on the information they get from that, but that information is wrong, that’s not the ultimate client’s fault – it’s the drone operators.

“Instead of using scaffolding and traditional surveying some companies are using technology – and there’s no settled answer to whether that heightens or lessens the risk.” 

This issue of liability is also present in new collaborative tools for construction projects, such as building information modelling (BIM), which allows the different parties on a contract to pool their work and create a unified plan for construction. 

Cargill explained: ”The construction sector is probably slower than some to adopt technology, which is probably because a lot of it’s quite traditional in terms of methods. But we are seeing things like BIM specialist consultants now, who do the modelling work for the main contractor. 

“There’s clearly a tech risk there too, but there’s also the traditional design aspect of it where it’s an integration of all the different consultants’ work. We have to ask where responsibility lies there. Is it the BIM consultant’s role to spot issues, or is that the designer’s?” 

Long tail risks

One specific complication of the construction insurance market lies in the long tail nature of its potential claims which, in combination with the potential for newer tech-related risks, could also create challenges down the line for brokers working in the sector. 

Constructors and contractors are required by regulation to retain insurance policies that cover them for a period after the delivery of a contract, so claims can take multiple years or even decades to materialise for insurers. 

And while this long tail is “part of the challenge in managing a construction portfolio” of business for an insurer, Cargill added that the need to consider the changing practices of construction firms could further complicate this. 

For example, Champion Professional Risks managing director John Jones gave the example of how some building companies had demonstrated technology that allowed them to 3D print entire buildings by creating modular components that slotted together. 

However, Jones added: “What if the design for the bathroom has an inherent issue and you’ve printed hundreds for a client? That would be quite an expensive thing to rectify for a simple tech issue.”