Engineering Insurance Market Expected to Reach $56.7 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Engineering Insurance Market, By Type (Contractors All Risk (CAR) Insurance, Erection All Risk (EAR) Insurance, Contractor’s Plant And Machinery (CPM) Insurance, Machinery Breakdown Insurance, Others), By Distribution Channel (Banks, Insurance Companies, Agents And Brokers), By Application (Construction Sector, Oil And Gas Sector, Manufacturing Sector, Transportation Sector, Energy And Utilities Sector, Others): Global Opportunity Analysis And Industry Forecast, 2023-2032" The engineering insurance market was valued at $24.1 billion in 2022, and is estimated to reach $56.7 billion by 2032, growing at a CAGR of 9.2% from 2023 to 2032.

Several key trends are shaping the landscape of the engineering insurance market. There is a notable shift towards more comprehensive and customized insurance solutions tailored to the evolving risks inherent in engineering projects. Insurers are increasingly focusing on providing specialized coverages that address specific project needs, such as modular policies for different project phases or enhanced coverage for emerging risks like cyber threats. In addition, the integration of technology, including data analytics and artificial intelligence, is revolutionizing risk assessment and underwriting processes. Insurers are leveraging these technological advancements to better understand price risks, improving accuracy in coverage and enhancing overall efficiency. Another significant engineering insurance market trends is the growing emphasis on sustainability and resilience in engineering projects, prompting insurers to offer policies that incentivize and protect sustainable practices while mitigating risks associated with climate change and environmental impacts.

Furthermore, the industry is witnessing a shift towards more collaborative approaches between insurers, engineering firms, and other stakeholders, fostering partnerships to collectively manage risks and drive innovation in insurance products and services tailored to the industry's needs. Overall, these trends reflect a dynamic and adaptive market, responding to the evolving complexities and demands of modern engineering endeavors.

Furthermore, major players in the engineering insurance industry analysis are entering into partnership to cater to the changing consumer preferences and offer more enhanced services to their customers. For instance, on November 7, 2022, Acturis, the leading Software-as-a-Service provider to the insurance industry, expanded the e-trade capabilities of its award-winning platform with the launch of its first cyber add-on product by HSB Engineering Insurance. The launch sees HSB Engineering Insurance, part of Munich Re, became the first insurer to go live with the cyber add-on solution on the Acturis platform. Following the successful launch of the HSB suite of construction insurance products on Acturis last March, the specialist engineering and construction insurer worked with Acturis to build a cyber product that will strengthen the insurer’s e-trade offering. Brokers can now quote and bind the HSB cyber add-on to other lines of business as an additional cover, alongside package policies.

Furthermore, on June 14, 2023, Hutch Underwriting introduced an annual construction insurance policy on EBIX Sunrise Exchange on June 16th. This offering includes a standard cyber section and is intended to provide protection against the rising wave of cybercrime impacting Australia's construction industry. It offers flexible options that allow brokers to tailor coverage to meet their clients’ needs and budgets, including existing structures cover, display homes and their contents, plant and equipment, care custody and control and pollution liability, and flexible sub limits and excesses. Thus, such strategies adopted by players in the market will enhance the growth of the market across the globe and it will further increase the adoption of engineering insurance policies in the upcoming years.

On the basis of application, the construction sector segment is the highest growing segment due to its extensive involvement in large-scale projects with high asset values and diverse risks. Construction projects encompass various stages, from planning to execution, involving heavy machinery, intricate operations, and numerous stakeholders. The sector faces risks like machinery breakdowns, construction delays, and third-party liabilities. Consequently, insurance is integral to mitigate these risks, safeguarding investments and ensuring project continuity.

Moreover, stringent regulations and contractual obligations often mandate insurance coverage for construction projects, further driving the sector's dominance in the engineering insurance market. However, the energy and utility sector segment is expected to be the fastest growing segment during the forecast period. This is due to escalating global energy demands and significant infrastructure developments. This sector encompasses diverse projects like power plants, renewable energy installations, and utility infrastructure, often involving high-value assets and complex technologies. The increasing focus on renewable energy and upgrading existing utility networks prompts substantial investments, driving the demand for insurance coverage. Moreover, as energy projects expand globally, there's an increasing recognition of the need for comprehensive risk management through insurance, propelling the energy and utility sector to be the fastest-growing segment during the forecast period.

North America has secured the largest share in the engineering insurance market growth in 2022. The region boasts well-established industries with extensive infrastructure projects, driving a higher demand for insurance coverage. In addition, stringent safety regulations and contractual obligations mandate comprehensive insurance, contributing to North America's dominant market share. On the other hand, Asia-Pacific is expected to experience the fastest growth in the engineering insurance market. This is due to escalating investments in infrastructure and construction projects. Rapid urbanization, coupled with government initiatives, fuels this growth. As the region witnesses a surge in engineering endeavors, there is an increased recognition of the need for risk mitigation through insurance. Emerging economies and evolving regulatory environments further stimulate the demand for engineering insurance in Asia-Pacific, making it the fastest-growing segment during the forecast period.

The COVID-19 pandemic significantly impacted the engineering insurance market, introducing a mix of challenges and opportunities. Initially, project delays, supply chain disruptions, and widespread uncertainties in the global economy led to a slowdown in construction and engineering activities. This slowdown translated into a decreased demand for certain types of engineering insurance, particularly in sectors directly affected by lockdowns and restrictions. However, the pandemic also highlighted the importance of comprehensive risk management, driving a heightened awareness of the need for insurance coverage among businesses involved in engineering projects. Insurers responded by adapting policies to include coverage for pandemic-related risks, and the industry witnessed an increased emphasis on digital solutions for underwriting and claims processing. As economies gradually recovered and infrastructure projects resumed, there emerged a renewed focus on resilience and risk mitigation strategies, potentially bolstering the long-term growth of the engineering insurance market.

Key Findings of the Study

• By type, the contractors all risk (CAR) insurance segment led the engineering insurance market in terms of revenue in 2022.
• By distribution channel, the insurance companies segment accounted for the highest engineering insurance market size in 2022.
• By application, the construction sector segment accounted for the highest engineering insurance market share in 2022.
• By region, North America generated the highest revenue in 2022.

The report profiles the key players operating in the engineering insurance market analysis such as AXA XL, Bajaj Allianz Life Insurance, Bank of China, Insureon, Munich, Reinsurance America, Inc., Progressive Casualty Insurance Company, RAKINSURANCE, SPA Insurance Brokers, Swiss Re, and The Travelers Indemnity Company. These players have adopted various strategies to increase their market penetration and strengthen their position in the engineering insurance market.