The U.S. construction market is currently in a sustained period of growth, driven by the onshoring of the manufacturing industry, the demand for data, the expected surge in government infrastructure spending and the transition to net zero.

Construction spending in the U.S. remains strong, advancing 8.8% for the first seven months of 2024 year-on-year, according to the Commerce Department's Census Bureau. Activity has been bolstered by the $1.2 trillion Infrastructure Investment and Jobs Act as well as the $52 billion CHIPS and Science Act.

As a global insurer, Allianz Commercial has seen a record number of submissions and activity for construction projects this year. With this increased construction activity comes an evolving risk environment that insurers, brokers and their construction clients are closely monitoring.

According to the 2024 Allianz Risk Barometer, an annual business ranking incorporating the views of 3,069 risk management experts in 92 countries and territories, natural catastrophe, including extreme weather events, floods, wildfires and earthquakes, is the top risk for construction and engineering respondents worldwide. This was followed by fires, explosions, business interruption, macroeconomic developments and cyber incidents.

Continuing skilled labor shortage

Absent from the Risk Barometer’s top five construction risk rankings, but increasingly a major concern, is the industry’s continuing labor shortage. The lack of qualified talent can lead to significant project delays as well as faulty workmanship that can result in design defects.

We witnessed this firsthand in Canada during its construction boom in the last decade. Insurers saw a direct correlation between increased construction activity amid a scarcity of qualified talent and an increase in insurance claims around faulty workmanship and design defects.