Case Study: Insurance for Construction Companies – Optimizing a US$1.2 Billion Development Project
Client
One of the largest real estate developers in the Middle East
Project Value: US$1.2 Billion
Challenge
Large construction projects require comprehensive insurance programs that satisfy contractual obligations, lender requirements and operational risks. The client had received an insurance proposal from its long-standing insurance broker for a major mixed-use development. Although the proposed program carried a substantial premium, our independent review identified opportunities to improve both cost efficiency and contractual compliance.
The client required an insurance program that protected the project throughout construction while meeting the insurance requirements of contractors, lenders and project stakeholders.
Independent Insurance Engineering Review
Our team conducted an independent insurance engineering assessment of the proposed construction insurance program.
The review included:
- Construction All Risks (CAR) insurance
- Third-party liability
- Insurance limit adequacy
- Policy wording analysis
- Contractual insurance compliance
- Coverage gap assessment
- Deductible optimization
- Risk allocation between project participants
- Claims preparedness review
Rather than focusing solely on premium, the review evaluated whether the insurance program appropriately reflected the project’s technical, contractual and financial risks.
Solution
Following our review, the insurance program was redesigned to better align with the project’s risk profile and contractual obligations.
The revised program:
- Reduced overall insurance procurement costs by more than 30%
- Improved contractual insurance compliance
- Optimized policy wording
- Enhanced coverage certainty
- Reduced unnecessary insurance expenditure
- Improved claims preparedness before construction commenced
Impact
The client secured an independently optimized insurance program that provided stronger contractual compliance while significantly reducing insurance procurement costs.
This enabled the project team to allocate additional capital toward project delivery rather than unnecessary insurance expenditure while improving confidence that the insurance program would respond as intended following a covered loss.
Key Takeaways for Construction Companies
Construction companies should not evaluate insurance solely on premium.
Independent insurance advisory can help:
- Reduce insurance costs
- Improve contractual compliance
- Identify coverage gaps
- Optimize policy wording
- Improve claims preparedness
- Evaluate insurance limit adequacy
- Support project finance requirements
Case Study: Insurance for Construction Companies Supporting Project Finance in Saudi Arabia
Client
One of the largest property developers in Saudi Arabia
Challenge
Large developers undertaking multiple construction projects across Saudi Arabia require insurance programs that not only protect physical assets but also support financing arrangements with banks and project lenders.
The client sought an insurance strategy that could be consistently applied across multiple developments while helping financial institutions better manage lending risk associated with large construction projects.
Independent Insurance Advisory
Our team developed an insurance engineering framework that aligned project insurance with both operational risks and lender expectations.
The review considered:
- Construction All Risks (CAR)
- Delay in Start-Up (DSU)
- Business interruption
- Insurance limit adequacy
- Policy wording optimization
- Claims preparedness
- Contractual insurance obligations
- Project finance requirements
- Lender risk mitigation
Insurance was structured not only to protect construction assets but also to reduce the financial consequences of project disruptions that could affect lenders, developers and project stakeholders.
Solution
The insurance program was continuously reviewed and optimized across the client’s construction portfolio as projects evolved.
Each review considered:
- Changing project values
- Construction progress
- Contractor responsibilities
- Financing requirements
- Operational risk profile
- Contractual obligations
- Emerging project risks
Insurance engineering recommendations were integrated into the procurement process to improve consistency across developments while supporting lender confidence.
Impact
The client implemented a structured insurance framework across major construction projects that strengthened insurance governance and supported ongoing financing discussions with banks.
By aligning insurance with project finance objectives and operational risks, the client improved insurance consistency across its development portfolio while enhancing protection for both project stakeholders and lending institutions.
Key Takeaways for Construction Companies
Insurance can support far more than regulatory or contractual compliance.
For large construction companies, independently designed insurance programs may help:
- Improve project finance discussions
- Support lender confidence
- Protect project cash flow
- Improve claims readiness
- Reduce uninsured exposures
- Optimize insurance procurement
- Enhance long-term project resilience
Case Study: Insurance for Construction Companies – Improving Cash Flow, Protecting Receivables and Supporting Project Finance
Client
A leading Bahrain-based construction company specializing in commercial and infrastructure projects.
Challenge
Construction companies often face significant working capital pressure when customer payments are delayed. Following the decline in global oil prices during 2014–2015, the client experienced increasing delays in accounts receivable, affecting liquidity, project cash flow and the ability to finance new construction projects.
The company required an insurance solution that would protect its receivables, strengthen its financial position and support future growth without increasing operational risk.
Independent Insurance Advisory
Our team conducted an independent review of the company’s operational risks, insurance program and financing objectives.
Rather than focusing solely on traditional construction insurance, we evaluated how insurance could improve both operational resilience and financial performance.
The review included:
- Operational risk assessment
- Trade credit insurance analysis
- Insurance procurement strategy
- Insurance cost optimization
- Policy wording review
- Coverage gap analysis
- Working capital protection
- Project finance considerations
- Construction company risk management
Using our international insurance market relationships, we structured a trade credit insurance solution aligned with the company’s operational risk profile while identifying existing insurance policies that were no longer delivering sufficient economic value.
Solution
An optimized insurance strategy was implemented to improve both risk protection and capital efficiency.
The revised program:
- Protected a substantial portion of the company’s accounts receivable through trade credit insurance
- Responded to qualifying customer payment defaults and extended payment delays
- Reduced unnecessary insurance expenditure by eliminating policies that no longer generated sufficient value
- Released capital previously tied to inefficient insurance spending
- Strengthened the company’s overall insurance program through independent insurance engineering and optimization
Impact
The optimized insurance program improved the company’s financial resilience while supporting continued business growth.
The client benefited from:
- Improved protection against delayed customer payments
- Greater confidence when commencing new construction projects
- Stronger working capital management
- Reduced unnecessary insurance costs
- Enhanced operational flexibility
- Improved support during financing discussions with lending institutions
The insurance program also strengthened the company’s ability to demonstrate risk management to project lenders, contributing to more favourable financing discussions for future developments.
Key Takeaways for Construction Companies
Insurance for construction companies extends beyond protecting buildings and equipment. A strategically designed insurance program can also protect cash flow, accounts receivable, project financing and long-term business resilience.
Independent insurance advisory may help construction companies:
- Improve insurance procurement
- Reduce unnecessary insurance costs
- Protect accounts receivable
- Strengthen project cash flow
- Support bank financing
- Improve insurance limit adequacy
- Identify coverage gaps
- Optimize policy wording
- Enhance claims preparedness
- Improve overall construction risk management