A boom in construction could leave insurers exposed to greater risks and force insurance premiums to rise.

According to a report published by the building cost information service of the Royal Institution of Chartered Surveyors, new construction work will rise significantly above the rate forecast over the next five years.

The report also said tender prices would rise at a rate of two and half times that of inflation.

Insurers have warned that increased building activity could lead to higher risks in the sector. Stefan Bramwell, Allianz Cornhill construction underwriting manager said: "Accelerated growth is positive because when there is more activity there is more to insure."

But, he warned: "Higher costs could hit the growth of some companies with profits going down. Less financially sound companies will inevitably have an impact on the claims frequency, and premiums will have to reflect that risk."

Zurich construction underwriting manager Andy Penney said rises in tender prices would lead to a proportional rise in claims settlements.

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