By: Yatinne Ramdin - (Claims Manager: Mirabilis), Tyrelle Correa (National (SA) Business Development Manager: Mirabilis) & Koketso Shabalala (Underwriting Head: SHA Risk Specialists)

Employing approximately 1.2 million people and underpinning critical infrastructure such as roads, bridges, and buildings, South Africa’s construction industry is a vital engine of economic growth and national development. 

But building the country comes with significant risk – both on and off site. Construction work is complex, and developers need more than hard hats and high-visibility vests to manage it all. They need comprehensive insurance solutions. 

South Africa faces mounting infrastructure challenges – from roads in disrepair to energy and logistics systems in urgent need of upgrades. These challenges, in theory, present a significant opportunity for the construction sector. Take the planned 2025 public infrastructure projects estimated at R238 billion in value, for example. These projects should signal a new era of sector growth, but reality tells a more complicated story. 

High interest rates and inflationary pressures can limit access to affordable financing, while rising costs of raw materials like steel and cement – compounded by global supply chain disruptions – have squeezed margins and delayed delivery. Many contractors are struggling to keep pace, let alone scale up.

Additionally, persistent labour challenges pose barriers to growth. Ongoing labour shortages are exacerbated by an aging workforce and declining interest in trade careers.  The sector is also experiencing a loss of skilled labour, with professionals leaving the country and new entrants in the market having to assume senior positions leaving a skills void and a proverbial “missing middle” in the talent pipeline.  

Complex and evolving regulations around sustainability, safety, and labour standards also create compliance burdens that can slow down project progress and increase costs. 

Against this backdrop, construction and engineering insurance provides critical protection to mitigate these risks.

At its core, this specialist class of insurance is designed to provide financial protection for unforeseen events such as accidents, natural disasters, and theft – essentially ensuring that projects can continue without significant financial setbacks.

Policies like Contractors’ All Risks Insurance (CAR) and Plant and Machinery Insurance offer targeted protection for key construction assets and materials. For major projects, non-cancellable insurance solutions that cover the full project duration – including testing and maintenance periods – provide contractors and employers with peace of mind that the terms agreed at inception will hold firm throughout delivery.

Liability coverage is also extremely important, particularly for multi-party infrastructure projects. A simple example is Santam’s Single Project Public Liability offering, which enables subcontractors to secure cover for the specific duration of their participation in a larger project, even when the principal contractor holds broader cover. Such flexibility ensures that all stakeholders are protected without unnecessary duplication.

Additionally, insurance policies like Advance Loss of Profits Insurance (ALOP) and Business Interruption Insurance help contractors manage the fallout of delays or disruptions. In an industry where time really is money, these tools can be the difference between recovery and financial distress.

The role of insurers has also evolved beyond underwriting risk. Many now act as strategic partners, offering expert guidance on understanding the regulatory landscape. They provide direction on compliance with local laws and regulations, as well as tailoring policies to ensure that construction firms meet all necessary requirements.

Many insurers also offer risk management services, including site inspections and safety audits. These services help identify potential compliance issues and recommend corrective actions. 

As insurers, we understand that our clients in the construction sector are navigating a challenging landscape – often with little to no control over factors such as the increasing prices of materials, high inflation, increased competition, water and infrastructure challenges and a shortage in skill in the sector.  To ensure resilient growth in the industry, our role as insurers is to continually evolve to enable and support construction businesses. 

We believe technology and data is central to this. Insurers can leverage advanced data analytics and modelling to better assess and manage risks related to climate change and sustainability. This helps in pricing policies accurately and providing better risk mitigation strategies for clients.