Key Highlights
- The modular build process spans manufacturing, transit, and assembly, demanding integrated insurance solutions covering all phases.
- The nature of risks is evolving, from data centres to SMRs and from wrap-ups to hybrid cyber/physical policies.
- Inflation, tariffs, and sourcing challenges make supply chain intelligence essential for mitigating cost overruns and scheduling risk.
Canada’s construction market and infrastructure sectors are undergoing a major transformation. The rise of modular construction, increasingly common in affordable housing, long-term care, and Indigenous community projects, is introducing complex logistics and risk exposures.
Unlike traditional builds assembled entirely on-site, modular components are often fabricated in one location and shipped, sometimes across international borders, before they are installed. This demands more sophisticated insurance solutions, including combined inland marine, transit, and on-site coverage.
Meanwhile, mega public-private partnership (P3) projects—think large transit, healthcare, and education infrastructure—are pushing for insurance programs that can keep pace with extended timelines, multi-phase construction, and performance obligations over decades. Fixed-term builders’ risk policies are under pressure from delays related to permitting, environmental reviews, labour shortages, and other regulatory or supply chain slowdowns.
Emerging Technologies, New Risks
Innovative approaches such as smart buildings, Internet of Things (IoT) enabled infrastructure, data centres, and even small modular reactors (SMRs) are introducing previously unimagined risks. These technologies blur the lines between physical damage and cyber exposure. For example, data centre projects now face “dual exposure,” both from equipment failure and potential cyber breach.
Hybrid policies combining cyber, operations errors & omissions (E&O), business interruption, and property damage are increasingly critical.
Parametric coverage, once reserved for weather events, is being adapted to cover power outages or latency issues. Early vendor risk assessments (especially for technology suppliers abroad) and cyber readiness are also becoming standard in construction risk placements.
Supply Chain Transparency and Insurance Innovation
Material cost inflation, tariffs (on steel, lumber, etc.), port congestion, and global supply chain disruptions are squeezing margins for contractors, particularly in remote or complex projects. Fixed-price contracts, even in newer P3 models, are vulnerable to unforeseen cost escalations.
Insurers and risk managers are turning to data and predictive intelligence to manage this. Marsh’s Sentrisk platform, for instance, maps multiple tiers in the supply chain using AI to detect weak links (e.g., dependence on a supplier in a high-risk geographic zone) and simulate the effects of tariff changes or logistical delays.
What’s Next?
As Canada continues to invest in infrastructure and leverage new construction methods, insurers, contractors, and public partners must evolve in lockstep.
Policies will need to become more flexible (with extensions, grace periods), more comprehensive (bridging physical, cyber, transit, performance risks), and backed by better data to identify and anticipate emerging threats. Without this shift, there is a real danger that coverage strategies will lag behind the complexity of the projects they’re meant to protect.