Building smarter: Aligning contracts, risk and insurance in MENA construction

Yet as projects become larger, faster and more complex, one question deserves to be asked much earlier: does the insurance strategy truly reflect the risks and obligations being assumed by the project?

The region’s ambition is clear, but growth is also bringing greater complexity. Risk is no longer confined to physical damage or site-based incidents; it can emerge from contractual structures, design responsibilities, supply-chain dependencies, extreme weather events, delay exposures and the interaction between multiple project stakeholders.

This is why insurance should not be treated simply as a procurement exercise once the major project decisions have already been made. Increasingly, contractors and developers are engaging insurance brokers as strategic risk advisors earlier in the project lifecycle – when contracts, risk allocation and programme structure can still be influenced. The objective is not merely to buy insurance, but to understand where risk sits, what can realistically be transferred, and what exposure may remain with the business.

Core risks facing construction in the MENA region

In a competitive environment, projects often have compressed delivery schedules as developers seek to bring assets to market swiftly. While this can drive efficiency, it can also magnify the financial consequences of disruption. Physical damage may be only one part of the loss; delayed completion, contractual penalties, additional financing costs and extended lead times for specialist equipment can create significant secondary exposures.

Environmental factors also play an important part in the risks facing the MENA construction industry. With the heavy rainfall and flooding we have seen across the region in recent years, weather-related events are now perceived less as isolated incidents and more as recognised perils – often interconnected with other exposures, like project delays and cost overruns.

Supply-chain dependencies add another layer of complexity. Many projects rely on imported materials, specialist equipment and international suppliers. Disruption to shipping routes, manufacturing capacity or a critical supplier can therefore affect not only delivery dates, but also replacement lead times, project sequencing and contractual obligations. Understanding these dependencies is increasingly important when assessing both project risk and the adequacy of insurance protection.

Contracts: A key component in construction risk

One of the biggest challenges for contractors surrounds the increasing complexity of contracts.

Construction contracts can transfer significant responsibility to contractors across multiple areas of risk. However, a contractual obligation does not automatically become an insured obligation. A policy may respond to the underlying peril while limits, sub-limits, deductibles, exclusions or policy conditions still leave a material portion of the contractual exposure with the contractor. Too often, that distinction only becomes clear when a claim occurs.

Engaging a broker early can help identify where contractual obligations and insurance coverage may not align, where responsibilities should be clarified or reconsidered, and whether the insurance requirements are achievable in the available market before the contract is finalised.

As a case in point, I recall a project where heavy rainfall led to significant flooding on the site. While the primary damage was covered under the contractor’s policy, the contract required full reinstatement, including debris removal. Unfortunately, there was a sub-limit for debris removal that was lower than the contractual requirement. As a result, the contractor had to absorb a substantial unexpected cost.

This illustrates a fundamental point: a project can be insured and still retain a material uninsured contractual exposure. Specialist risk advisory at the contract stage can help identify these mismatches before a loss occurs. 

When clients engage us early, we can challenge assumptions around what is insurable, advise on risk allocation between stakeholders and flag liabilities that insurers may not cover in full – if at all. We can also consider how different policies within the programme interact, whether limits and sub-limits are proportionate to realistic loss scenarios, and where residual exposures need to be understood or managed outside insurance.

A useful way to test a programme is to move beyond the question, “Do we have cover?” and ask instead: if a credible loss happened tomorrow, what would the contract require us to do, how would the policy respond, what limits or sub-limits would apply, and what cost would remain with the business? Stress-testing realistic claim scenarios before a loss can expose weaknesses while there is still time to address them.

Advanced risk analysis in an evolving landscape

Data and analytics are playing an increasingly important role in supporting decision-making. Natural catastrophe (NatCat) modelling, claims data and project-specific exposure information can help assess climate-related risks, identify loss concentrations and inform decisions around limits, deductibles and risk mitigation.

However, technology is an enabler, not a replacement for human expertise and judgement. Data can highlight vulnerabilities, but interpreting what they mean for a particular contract, construction methodology or insurance programme requires specialist knowledge. Claims experience is especially valuable here: previous losses can reveal where policy wording, documentation, risk controls or stakeholder responsibilities created friction, allowing those lessons to inform the next programme before another loss occurs.

Risk engineering also has an important role beyond placement. Site surveys, risk recommendations and ongoing review of changing exposures can help improve risk quality throughout the construction period. Combining these practical measures with data-driven insight, claims experience and specialist insurance knowledge creates a more complete approach from pre-project planning through to completion.

Local insight: the value of specialist expertise

The MENA insurance market is highly nuanced, and the outcome for a major project can depend as much on programme architecture and market strategy as on the headline scope of cover.

Insurer and reinsurer appetite can vary materially by project type, value, location, construction method and exposure. For larger or more complex developments, achieving the required limits may involve multiple layers of capacity and careful coordination between local and international markets.

Navigating this landscape requires more than approaching a broad panel of insurers. It means matching the risk with appropriate underwriting appetite, presenting the project and its risk controls effectively, and considering not only price and coverage but also capacity, financial strength, technical capability and claims experience.

For major developments, policies should also be considered as parts of an integrated programme rather than in isolation. The interaction between construction, liability, delay, professional and other project-specific exposures can be as important as the individual policy terms. The objective is to create a coherent programme with appropriate coverage, sustainable capacity and counterparties capable of supporting the project throughout its lifecycle – including when a complex claim arises.

Building resilience for the future

Looking ahead, I believe construction businesses across MENA will increasingly treat risk advisory as part of project strategy rather than as a final insurance step. The earlier contractual, technical and financial exposures are considered together, the greater the opportunity to make informed decisions about risk transfer and risk retention.

For contractors, developers and project owners, this means engaging risk advisors earlier – ideally during tendering and contract negotiation – and placing greater emphasis on contractual exposures, risk allocation, project-specific loss scenarios, claims trends and the practical risk controls that can reduce the likelihood or severity of a loss.

Ultimately, resilience is built through alignment: between contract and policy, between project stakeholders, and between risk strategy and commercial objectives. Insurance is most effective when it forms part of that broader risk strategy rather than being considered in isolation.

In my experience, the best time to discover an insurance gap is during project planning – not during a claim. An integrated and proactive approach gives organisations a better opportunity to understand uncertainty, protect project economics and pursue the region’s growth opportunities with greater confidence.