The biggest cause of financial losses on large-scale construction projects across the globe in the last five years is fire, according to research, while political risk and international sanctions are a growing concern for contractors.
Fire accounts for more than one-quarter of losses on insurance claims made by contractors, according to Allianz, worth around €2.1bn since 2014.
“Fire and explosion claims remain the biggest cause of loss due to the high values associated with engineering and construction projects today.
“There hasn’t been a change in the frequency of fire claims, but when they happen, the impact is much higher,” said Allianz head of property and engineering claims Raymond Hogendoorn.
Large construction projects have grown exponentially in size and cost in recent years. The expansion of the Al Maktoum airport in Dubai will not be completed until at least 2030 and is expected to cost around $36bn.
Such is the length of some projects that trade disputes are a growing issue for contractors. The trade war between the US and China has added millions of dollars to claims for plant equipment and machinery exported from China.
In the UK, contractors have struggled in recent years with cost overruns on projects, a factor which contributed to the momentary administration of outsourcer Interserve earlier this year and the collapse of Carillion in early 2018.
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