Kathmandu. The availability of insurance is becoming a major factor in determining whether large construction projects can receive financing.
According to Zurich Insurance Group’s ‘Beyond 2030: The Future of Construction’ report, as construction risks become more complex and interrelated, insurance companies are increasingly playing a role in evaluating project viability. “Projects without adequate insurance coverage may find it difficult to obtain funding from lenders and investors,” the report warned.
According to Zurich, extreme weather and natural disasters are the most serious risks facing the construction sector in the next 5 years. Zurich scored its risk severity 6.2 out of 7.
Financial market weaknesses and labor shortages have been closely followed. This highlights the growing range of risks that insurance companies and project owners must manage.
According to Kelly Kinzer, Zurich’s global head of construction and collateral, increasingly complex projects are being completed in a more volatile risk environment and shorter timeframes. “Insurance is necessary because projects that can’t afford insurance are less likely to get financing,” she said.
The report is becoming an early indicator of the strength of insurance projects. “Insurance companies identify potential risks during the planning, site selection and procurement phases, rather than after construction begins,” the report said.
Where insurance is not available, limited, or very expensive, lenders may change financing terms, delay financing, or reduce their commitments. –Agency
