There were $380 billion in global economic losses resulting from natural disasters in 2024, according to a recent report from Aon. The report emphasizes the importance of resilient infrastructure in reducing the impacts of climate disasters.
Aon specifically references building codes in Florida, which it credits with partially mitigating damage from Hurricanes Helene and Milton in 2024.
In addition to building codes that take disaster risk into account, Aon discusses the importance of better warning systems, weather forecasts and evacuation planning in saving lives during disasters.
In the U.S., climate risk for the construction insurance industry varies depending on the region. In California and the Pacific Northwest, for example, insurers are most concerned about earthquakes. Meanwhile, those in the Central U.S. and Midwest are concerned about severe convective storms; the Gulf and Atlantic Coasts have to worry about storm surge; and drier areas of the country are dealing with major wildfire risk.
When it comes to capacity and pricing in the construction industry, Aon reports they have remained relatively flat for named windstorms (NWS), floods and earthquakes. However, there has been a tightening of limits and some increased deductibles for wildfire and storm coverage in high-risk areas.
Water damage continues to be a headache for insurers. To combat this, Aon notes that “insurers have increased their focus on deductibles and are pushing for the use of technology to reduce risk exposure and/or quantum of loss events.”
In addition to the enhanced defects exclusions available from most insurers, other approaches insurers are taking to lessen risk in this area include proprietary company wording, tighter definitions of “damage” and “defects,” higher deductibles and the occasional use of sublimits.
Despite climate struggles, Aon reports that the construction insurance industry as a whole is in a softening cycle with favorable conditions driven by increased capacity and insurers’ growth aspirations.
“There has been rapid growth in the number of large, complex construction projects — especially related to infrastructure, energy and high-tech manufacturing — which offers significant opportunities for construction insurance,” the report states. “Technological innovation and digitization are improving efficiency, safety and risk management practices.”
In the slideshow above, we’ll look at five major takeaways from Aon’s 2025 Global Construction Insurance and Surety Market Report.
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