Insurability Starts at Design for Wet Risk Construction

Insurability Starts at Design for Wet Risk Construction
August 20, 2026 8 mins

Insurability Starts at Design for Wet Risk Construction

Insurability Starts at Design for Wet Risk Construction

Wet risk construction projects present some of the market’s most complex exposures, with losses often driven by temporary works, groundwater, flooding and sequencing. Tackling insurability at the design phase can improve resilience, broaden cover and deliver more predictable outcomes.

Key Takeaways
  1. Wet risk projects generate unique construction-stage vulnerabilities that can lead to severe losses driven by temporary works failures and the action of water.
  2. Insurers increasingly assess how wet risk has been identified, quantified and mitigated during design and construction planning.
  3. Early collaboration between engineers, contractors, project owners and insurers can improve insurability, strengthen resilience and support better commercial outcomes.

Wet risk construction has always represented one of the most complex classes of construction risk. Traditionally associated with marine works, dams and river infrastructure, wet risk can actually extend across a broader range of civil engineering projects, including underground works such as tunnels and bridges, land reclamation, and groundwater or flooding-exposed developments.

While climate volatility is creating more uncertainty around water-related hazards, the key challenge for many projects remains unchanged: understanding how water can interact with temporary works, construction methodology and partially completed assets during the construction phase.

Working near water introduces a unique set of construction-stage risks that can rapidly transform into a major project loss. A failure of temporary works, unexpected wave action or rapid groundwater ingress can result in significant physical damage, critical path delays and complex contractual disputes.

As projects become larger and more complex, insurers are placing increasing emphasis on how these exposures are understood and managed before construction begins — at the design conception stage.

Understanding Wet Risk Exposure

The Challenge: Permanent works are typically designed to withstand their intended operating environment. That means many of the largest wet risk losses can occur during the temporary work stages of construction.

Temporary works are usually designed with a much shorter resilience lifespan, but can still be exposed to the same magnitude of hazards during critical construction phases. Excavations remain open, flood protection systems are incomplete, structures are only partially constructed and groundwater conditions are still being actively managed.

These vulnerabilities can lead to loss events that result in major property damage, delay and contractual claims, such as:

  • Flooding of excavations
  • Groundwater ingress
  • Cofferdam failure
  • Flood protection failures
  • Dewatering system breakdowns
  • Scour around structures
  • Overtopping during construction
  • Damage to partially completed works
  • Marine plant and equipment losses

Wet risk projects often become difficult to insure due to insufficient understanding of the following factors:

  1. Temporary Works Exposure
    The design and resilience of temporary structures frequently determine the severity of loss following a water-related event.
  2. Construction Methodology
    Construction sequencing and staging can significantly influence exposure at various points in the project life cycle.
  3. Risk Ownership
    Projects face increased potential for uninsured exposures and disputed claims when responsibilities for managing wet risk are unclear.
  4. Water Behavior
    Insufficient understanding of hydrology, hydraulics, groundwater conditions and flood pathways can leave projects vulnerable to unexpected loss scenarios.

The Solution: Improving insurability starts with understanding where losses are most likely to occur and addressing those vulnerabilities before they become embedded within project delivery. This requires a coordinated approach between engineering, temporary works design, construction planning, contracting and insurance.

By engaging insurers and risk specialists early, project teams can better understand how underwriters view exposure and what evidence is required to support underwriting decisions. This allows resilience measures to be incorporated when they are most effective and least costly to implement.

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Wet risks sit at the highest end of complexity in construction. It’s where insurers can apply the most scrutiny and the strictest terms. When insurers are engaged during the design stage, projects can be better positioned to meet underwriting requirements by the time they reach placement.

Vincent Banton
Head of Construction & Infrastructure, Asia

The Rising Complexity of Wet Risk Insurance

Complexity Insurance Impact
Water behavior uncertainty, including tide levels, wave action, groundwater inflows and water ingress Greater underwriting scrutiny and increased information requirements
Large-scale use and reliance on temporary works Underwriting focus on design standards, peer reviews and contingency planning
Large concentrations of exposed value Capacity constraints and pressure on policy terms
Underground and marine construction activities Greater potential for severe loss scenarios and extended recovery periods
Complex delivery structures Increased concerns regarding risk allocation and claims responsibility
Late engagement with insurers Reduced ability to influence coverage, pricing and capacity outcomes
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Historical data doesn’t tell the full picture anymore. Many of the biggest flood losses we’ve seen occur outside of known risk zones. As a result, insurers are becoming more cautious, asking tougher questions and tightening terms when and where there is perceived heightened exposure or vulnerability to water infiltration.

Jason Behrer
Managing Director, Builder's Risk, United States

How Insurers Evaluate Wet Risk Projects

Insurers don’t assess wet risk projects solely based on location. Underwriting increasingly focuses on how exposure has been identified and managed throughout the project life cycle.

Key areas of focus include:

  • Hydrological and hydraulic analysis
  • Groundwater assessments
  • Temporary works design
  • Independent engineering review
  • Construction sequencing
  • Contractor experience
  • Flood response procedures
  • Monitoring and warning systems
  • Emergency contingency planning

Projects that can clearly demonstrate these controls typically experience stronger insurer engagement and broader market support.

How Insurers Manage Wet Risk Uncertainty

As wet risk projects grow more complex and uncertainty around exposure increases, insurers are seeking greater transparency and applying more selective standards when deploying capacity.. Projects may face tighter coverage conditions, higher deductibles, reduced limits for specific perils and increased evidence requirements before coverage is offered.

The market is also looking beyond traditional catastrophe zones, placing greater focus on secondary perils and water-related exposures that may previously have received less scrutiny.

As underwriting expectations evolve, improving insurability depends on providing a clear view of project risk. Brokers and insurers are collaborating more closely to develop structured underwriting submissions that articulate risk exposures, mitigation measures and project resilience. Advanced modeling and integrated data help provide underwriters with a clearer understanding of risk.

Combining client data with insurer analytics helps all stakeholders quantify risk and make more informed decisions. Aon’s Cesare Casiere, Director, Construction and Infrastructure Specialty, Europe, the Middle East and Africa, explains: “One-way data submission or outdated tools no longer work in this market. Insureds that engage in proactive, ongoing dialogue with their insurance partners can help both parties understand, mitigate and manage wet risk more effectively.”

The Bottom Line: These market-led strategies require early engagement to be successful. Collaboration between insurers, brokers and project teams in the design phase helps embed resilience from day one, while securing coverage that reflects true exposure across the life cycle.

Projects that attract insurance capacity aren’t just those with the lowest exposure. They are the projects that can demonstrate how wet risk has been identified, quantified and managed at an early stage, providing transparency to the insurance market.

5 Strategies to Secure Insurability in Wet Risk Projects

Designing for insurability can strengthen lender and investor confidence in a project's risk profile, improving access to financing and project bankability. This approach also helps avoid late-stage insurance cost shocks and supports more effective recovery planning following a loss.

In practice, designing for insurability in wet risk means:

  1. Engaging Insurers During Design
    Early engagement can identify underwriting concerns before they become embedded in project design and delivery.
  2. Designing Temporary Works for Resilience
    Temporary work often drives the largest construction losses. Robust design, independent review and contingency measures can materially improve insurability.
  3. Incorporating Hydrological and Groundwater Analysis
    Understanding how water behaves across the site is fundamental to both engineering resilience and insurance outcomes.
  4. Integrating Construction Methodology into Risk Planning
    Sequencing, seasonal scheduling, dewatering strategies and flood response measures should be assessed alongside engineering design.
  5. Clearly Defining Risk Ownership
    Contracts should establish accountability for managing wet risk throughout design, construction and commissioning.
Turning Wet Risk Complexity into Insurable Confidence

Case Study

Turning Wet Risk Complexity into Insurable Confidence

An offshore island reclamation project faced limited insurer appetite due to concerns around coastal exposure, temporary works performance and storm-related loss scenarios. Working closely with Aon during project development, the team translated complex technical information into insurance-relevant risk assessments. Particular attention was given to reclamation sequencing, temporary works resilience and flood mitigation measures. By engaging insurers early and incorporating underwriting considerations during design, the project improved insurer confidence, generated stronger market participation and secured a more effective insurance program aligned to its risk profile.

Early Planning Supports Wet Risk Project Success

Insurability is not determined at placement for wet risk projects. Rather, it is shaped by decisions made during design, temporary works planning, procurement and construction methodology development. Stakeholders that address these factors early can better secure insurance capacity, control costs and deliver resilient wet risk projects.

Success depends on an integrated approach to risk management. Aon’s engineering, contract, financing and insurance expertise helps project teams identify and address potential exposures before they become barriers to project delivery. With clearer visibility into risk, cost and capacity trade-offs, stakeholders can make informed decisions that reflect technical realities and market expectations.

Learn how to structure your wet risk projects effectively and achieve more predictable, resilient outcomes.

Aon’s Thought Leader

Vincent Banton
Head of Construction & Infrastructure, Asia

With contributions from Jason Behrer, Cesare Casiere, Ming Hui Lim, Milos Obradovic and Peter Rudd.

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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