The global construction industry is entering an unprecedented era of megaprojects: multi-billion-dollar builds that stretch over years, span continents, and test the limits of human expertise and supply chains.
With record infrastructure spending, explosive growth in data center construction, and new demands from the energy transition, construction risk has never been more complex or more collaborative.
Experts told Insurance Business that the new scale of global construction is reshaping how risk is managed, priced, and shared among stakeholders.
“Just three or four years ago, billion-dollar projects were rare,” said Douglas Schrift (pictured on the left), global head of infrastructure at Liberty Mutual. “Now we see multiple projects of that size every month, and they continue to grow.”
Schrift pointed to a surge of activity driven by energy transition projects, airports, roads, dams, and especially the boom in data centers needed to power AI and digital infrastructure. According to McKinsey & Company, global capital expenditures on data-centre infrastructure through 2030 are projected at nearly $7 trillion, with over 40% of this spending in the US.
While these projects signal economic vitality, they also highlight the challenges in the construction industry. Supply chain pressures, project design changes mid-build, and high labor turnover are compounding exposures across the construction lifecycle.
“As a result, we’re seeing more demand for surety and subcontractor default insurance, more interest in casualty coverage, and more focus on the entire asset life cycle, from planning and construction through operations and even decommissioning,” noted Schrift.
Perhaps the most persistent challenge facing the construction sector is labor. The shortage of skilled workers has worsened as mega-project demand outpaces workforce capacity.
“Skilled labor has been an issue (in construction) since the Great Recession in 2008,” Schrift said. “These larger, sometimes remote projects draw labor in, which raises concerns about quality and skill sets even for specialized equipment operators.”
In the US, legal system abuse and social inflation are also adding financial strain for contractors and developers. Claims severity for construction-related liability exposures has increased noticeably in recent years.
In a 2024 report, WTW cited third-party bodily injury claims and design-build/alternative project delivery as the leading factors behind a continuing trend of severity claims on roads and highway/infrastructure projects.
“A bodily injury claim today can cost two or three times what it did five years ago,” said Aldo Fucentese (pictured on the right), senior vice president and chief underwriting officer for the construction practice. “Third-party litigation funding and aggressive advertising by plaintiff attorneys are driving nuclear verdicts. That cost burden ripples across the entire insurance system.”
According to the Liberty Mutual specialists, the insurance market is responding to persistent challenges with heightened scrutiny and disciplined capacity deployment, especially for property risks tied to catastrophic (cat) exposures.
While casualty pricing remains competitive for projects like data centers, property capacity is tightening, said Fucentese. “A $10-billion (data center) project needs enormous capacity. No single market can take that on, so it’s typically written on a quota-share basis across multiple carriers,” he explained. “Capacity is generally available unless the site is in a catastrophe-prone area.”
Cyber and technological risks are also emerging as critical considerations, especially in data center builds. Insurers are still grappling with how to assess and allocate liability for data loss, service interruption, or security breaches following construction completion.
“If something happens after completion and data is lost, who is liable? How is that risk transferred?,” Fucentese said. “It’s an evolving area.”
As construction project size and complexity grow, both executives agreed that the key to effective risk management lies in intentional collaboration among contractors, brokers, and insurers.
That philosophy underpins Liberty Mutual’s creation of its global infrastructure solutions practice, led by Schrift, in September. The practice brings together underwriting, risk engineering, and claims experts to deliver customized solutions for large, complex projects.
“We don’t want a brushstroke approach; it’s about being surgical,” Schrift explained. “We’re building deeper relationships with customers to tailor solutions that meet their specific needs and risks.”
Fucentese added that while data center construction is currently the hottest segment, the company is mindful of maintaining balance. “Some contractors are even walking away from billions in data center work because they don’t want to overextend resources or neglect other clients,” he said. “This boom won’t last forever.”
Both leaders underscored that the era of megaprojects demands a holistic, lifecycle approach to risk spanning design, construction, operation, and decommissioning.
“These projects require visibility across all stakeholders, and the sooner partners are brought into the conversation, the better. This is especially important as the landscape shifts,” said Schrift. “Relationships and expertise will matter more than ever.”
