Mukfin
Halfway through the year, the construction and engineering sector is demonstrating promising signs of recovery after years of stagnation. The global construction market growth forecast for 2025 is projected at 2.8%, a notable improvement from the 2.3% growth anticipated in 20241. This upward trajectory reflects a renewed optimism within the industry. In Africa, the construction landscape has become increasingly intricate, driven by substantial infrastructure projects emerging across the continent, signalling growth and the potential to transform local economies. As reinsurance brokers, we play a critical role in bridging the relationship between insurers’ capacity constraints and the evolving risk appetites of reinsurers. We ensure that both parties are well-prepared for the opportunities and challenges in this line of business.
Governments worldwide are prioritizing renewable energy initiatives and enhancing urban planning. This focus is leading to upgrades in transportation infrastructure, the development of affordable housing projects, and the implementation of disaster resilience programs, among others. These governmental pushes have spurred an increase in construction activities, creating avenues for growth. The majority of these projects are large-scale and require effective risk management and insurance support. This scenario presents a significant opportunity for insurers, particularly reinsurers. Innovative reinsurance structures will be essential for managing aggregate exposures effectively, as traditional models may no longer suffice in this rapidly evolving landscape.
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The construction and engineering insurance market is transforming, influenced by technological advancements, evolving risk landscapes, and changing client demands. For instance, the rise of modular construction introduces new risks, such as off-site liability, necessitating bespoke reinsurance solutions. Additionally, climate-adaptive construction projects require thorough risk management and meticulous pricing adjustments to account for environmental changes and potential future liabilities. To thrive in this dynamic environment, insurers and reinsurers must place innovation at the forefront of their strategies, balancing growth with prudent underwriting, especially in regions susceptible to natural catastrophes.
At Mukfin, our focus is on negotiating capacities that align with the evolving risk profiles of insurers. Our extensive experience in placing significant construction and engineering projects positions us as a valuable strategic partner to both cedants and reinsurers across the continent. We deeply understand the complexities inherent in these projects and ensure that reinsurance contracts include clear claims protocols, minimizing disputes and expediting recoveries for cedants. Beyond merely providing reinsurance capacity, we offer crucial post-bind support through workshops and training. This assists insurers in refining their underwriting strategies and recognizing the pressing necessity of robust reinsurance coverage.
It’s important to note that the rebound in the construction industry will not be uniform due to regional disparities in development and resource availability. Challenges such as labour shortages and fluctuations in material costs will continue to persist. Nevertheless, reinsurance brokers must act as market stabilisers, ensuring that capacity is deployed effectively where it is needed most while maintaining underwriting discipline.
At Mukfin, we are committed to guiding insurers and reinsurers through this transformative period with innovative structures, detailed risk insights, and a collaborative ethos. This upcoming upswing is not merely about increasing volume; it’s about fostering resilience for the next cycle of growth and stability in the industry, ensuring a sustainable future for all stakeholders involved.