Construction risk is getting harder to assess for a reason that has little to do with new materials or building methods, according to Steve Kelly (pictured), managing director of construction at DUAL UK: the people who used to carry that expertise are leaving the sector faster than they're being replaced.
"I think there's been a lot of expertise that's gone out of the sector that's not necessarily being replaced," Kelly said. "So I think there is a skills gap issue with the sector that needs to be filled." Efforts are under way to bring in school leavers and graduates, he added, but the shortfall in experienced people has a direct consequence for risk. "With that expertise that's been lost from the sector, the potential is there for higher risks."
Kelly has spent more than 35 years in insurance, underwriting some of the largest construction risks across the EU, precisely the kind of long-accumulated expertise he warns is becoming harder to find elsewhere in the sector.
That same skills question shapes how he distinguishes a well-managed risk from one that concerns him. Experience, competence and a proven track record all matter, particularly as firms adapt to newer, greener building methods. Sustainable construction is bringing benefits, in his view, but not without trade-offs.
"There's potential for greater issues from a fire perspective," he said. "Escape of water has been pretty prevalent in the recent past as well."
The skills gap Kelly describes is playing out against an industry backdrop that is, on paper, improving. UK construction has come through a rough couple of years, high SME insolvency rates, falling demand and persistent skills shortages, but insolvencies are now at their lowest since 2020, inflation has stabilised, and anticipated interest rate cuts are expected to support lending. Construction output is forecast to rise by 1.6% in 2025 and average 2.1% annually through 2029, according to the Construction Industry Training Board's Outlook report, with government planning reform and housing targets adding further momentum.
Kelly also pointed to variation across the insurance market itself as a factor construction firms don't always appreciate: cover that looks broadly similar on paper can differ significantly in scope from one insurer to the next, particularly on the liability side rather than first-party cover.
Asked whether the pace of change in construction is creating more risk or more opportunity, Kelly didn't pick a side. "I'm going to give a diplomatic answer and say a bit of both, to be honest with you," he said.
Prefabrication and off-site construction can get large projects finished faster, a genuine advantage in places like central London, where speed reduces disruption to the surrounding area, but it brings its own downsides, including the same fire and escape-of-water risks he flagged earlier.
For underwriters, that means the job isn't simply reacting to what's already on site. "We do keep our finger on the pulse in terms of understanding what is the next generation of building construction methods," Kelly said, describing horizon-scanning as now a core part of the role alongside day-to-day underwriting. "We're probably innovating more than we've ever done in the construction sector."
The picture Kelly describes is one of a sector accelerating on two fronts at once - recovering demand and faster, more experimental building methods - while its pool of experienced judgment shrinks. For a market trying to price construction risk accurately, working out which of those forces dominates on any given project may prove harder than assessing either one on its own.
