Regional update
India, the Middle East, and Africa (IMEA)
India
Construction outlook
Large-scale and complex megaprojects in fast-growing sectors — such as digital infrastructure and technology (including semiconductor manufacturing and data centers) and energy (including small modular nuclear reactors and battery energy storage systems) — continued to accelerate. These projects were driven by heavy public investment, public-private partnership models, and foreign direct investment inflows.
Contractors faced challenges, from macroeconomic pressures such as supply chain disruptions, labor shortages, adoption of emerging technologies, and rising costs, to country-specific issues including increased competition and project delays resulting from land acquisition and right-of-way disputes.
Insurance market
The Indian insurance market saw consistent rate deceleration and increased risk appetite. Insurers scrutinized risks with tighter underwriting guidelines. Particular caution was applied to hydroelectric, underground, and new technology projects.
Local capacity increased year on year, up 12% in 2025, and loss limits followed a similar trajectory, while deductibles were set on a case-by-case basis. Capacity remained plentiful for annual programs, although individual project policies remained popular with contractors.
Construction clients increasingly sought combined construction and operational coverage for projects involving multiple phases, handovers, and testing stages.
Emerging cyber risks and new labor laws shaped construction industry coverages, with growing demand for continuity of coverage, pro-rata extensions, and higher escalation provisions.
Middle East
The Construction Market Update was completed prior to the recent escalation of conflict in the Middle East. While the global insights and analysis contained within remain relevant, they may not reflect the latest developments in the region. Marsh is actively monitoring the situation and its potential impact. Please reach out to your Marsh representative for any insights or support required.
Construction outlook
The construction and infrastructure sector within the Middle East continued to grow. Many countries in the region have invested in urbanization projects, including hospitality and residential/commercial development, as well as associated projects created by these such as renewable/conventional energy, and large-scale infrastructure including rail, metro, ports and airports development.
Rising global demand for digital infrastructure ecosystems has also driven an uptick in data center projects. As these facilities require clean energy and water, investment towards ancillary projects such as desalination plants and power projects has also increased.
Whilst the region continued to pursue a transition away from oil and gas, it continues to be the region’s core power source. More recently other natural resources are being accessed as multiple gold and copper mining projects have been observed.
Insurer market and product overview
The market outlook was quite aggressive over the last few years in view of announcement of numerous large scale projects. While a small number of large projects have been scaled down, the underlying investment commitment to the region continues, with spending reallocated to the immediate and priority developments rather than an absolute withdrawal. With the added pressure due to excess capital, insurers are considering wider coverage options similar to past quarters for core industries while complex, upscaled, natural catastrophe exposed and longer projects with delay in start up (DSU) continue to be reviewed more technically.
LEG3 is available for the majority of construction risks, except for wet works, pipelines, underground work and power or upscaled projects. The Middle East insurance market continued to have significant capacity with majority of large and complex projects being placed within the region. The construction liability market continued to attract strong interest from insurers, with capacity offered by regional and global insurers amid a comparatively less litigious environment. This contributed to a general decline in rates, with insured-favourable terms and conditions available.
Africa
Construction outlook
Africa’s construction and infrastructure sector has been driven by rapid urbanization, increased digital adoption, and enhanced regional trade integration.
Investment continued to increasingly be directed toward energy generation and transmission (including renewables and storage), transport corridors, logistics hubs, water systems, and digital infrastructure.
Project scale and technical sophistication increased, especially in power, mining-related infrastructure, and industrial processing, driving demand for experienced international contractors, specialist engineering capability, and robust risk management solutions.
South Africa’s construction and infrastructure contractors generally operated in a high-risk environment shaped by several factors:
- Financial strain: Weak balance sheets and limited bonding capacity, following high-profile failures, increased counterparty and completion risk.
- Public sector pressures: Payment delays and fiscal stress, particularly among state-owned entities, placed pressure on contractor cash flow and dispute exposure.
- Labor instability: Unionized labor dynamics and skills shortages contributed to the risk of strikes, productivity constraints, and potential cost overruns.
Insurance market
South Africa, Morocco, Nigeria, and Kenya remained key hubs for underwriting capacity and technical expertise. Other African insurance markets continued to depend on international insurers and brokers to support complex engineering and project risks.
Global reinsurers and Pan-African insurers played a significant role in enabling capacity for large infrastructure projects, though overall capital constraints and currency volatility continued to negatively impact available limits and drive reliance on cross-border placements.
South Africa’s construction insurance landscape remained competitive, with strong domestic participants competing alongside global insurers. Mid-sized contractors typically remained relationship-driven and cost-focused, while larger infrastructure sponsors and lenders continued to favor international insurers, specialist construction expertise, and complex, multi-jurisdictional programs.
Sustainability considerations increasingly shaped insurer risk appetite for African construction projects, particularly in energy, mining, and large-scale infrastructure. International (re)insurers applied greater underwriting scrutiny to carbon-intensive developments, coal-fired power, and environmentally sensitive projects, while demonstrating stronger appetite for renewable energy, grid expansion, water, and climate-resilient infrastructure. Multilateral-backed projects benefited from additional capacity and insured-favorable terms due to enhanced environmental and social safeguards.
Construction risk rates remained flat in South Africa. Upward rating pressure continued on construction and single-project professional indemnity and surety lines, driven by higher claims activity, economic pressures, and more detailed underwriting requirements.
Product overview
In South Africa, risk appetite for construction project insurance and annual construction programs generally remained strong. More selective risk appetite was applied to climate-exposed risks and perceived higher-risk industries and activities. South African-based insurers focused on finding solutions to address lender requirements regarding paper security.
The availability of LEG3 insurance cover in South Africa remained highly restricted and dependent on detailed underwriting information and the specific risk profile of the construction project. Insurers often sought to impose tailored conditions to manage exposure.
There was an increased focus on environmental liability insurance, and a growing interest in parametric insurance solutions to address natural catastrophe exposures.