Key factors driving construction innovation in insurance

The construction industry is rapidly evolving, with new materials, design approaches and technologies dramatically influencing the scope and complexity of major projects.

As the accelerating pace of change drives both new opportunities and risks facing today’s contractors, the insurance industry is also challenged to innovate with solutions built to respond to the needs of projects pushing the boundaries of construction innovation.

For insurers, delivering risk management solutions, products and capacity contractors and project owners will need in the future begins with insights into the direction and tempo of innovation in the construction field. As a leader in providing risk management products, services and solutions to the construction industry, Zurich views the following as key areas of innovation to watch:

Data centers

One of the most significant trends in megaprojects today is the surge in data centers being constructed to support artificial intelligence (AI), cryptocurrencies, cloud computing and other technologies shaping the future of global society. Spending on data center construction continues to break records. Construction starts in the U.S. in July 2025 totaled $14 billion, almost doubling the $7.4 billion starts in July 2024. In fact, single-month starts in July 2025 exceeded the value of data center starts for the entire first half of the year, which totaled a record $12.8 billion. Projections for all of 2025 are in the neighborhood of $46 billion.1

By September 2025, data centers represented

13%

of Zurich’s new project count.

Looking ahead, research by McKinsey suggests that by 2030, data centers are projected to require $6.7 trillion worldwide to keep pace with the ever-accelerating demand for computing power. This includes data centers designed to handle AI processing loads requiring $5.2 trillion in capital expenditures, while those powering traditional IT applications will require $1.5 trillion in capital expenditures. In sum, nearly $7 trillion in capital outlays by 2030.2

The growth in data center projects has been apparent in Zurich’s own Builders Risk premium and project counts over the past five years. In 2021, data center construction accounted for 1% of our new project count. By 2023, that statistic increased to 9%, growing to 14% in 2024. By September 2025, data centers represented 13% of Zurich’s new project count.

The accelerating pace of data center projects will mean a variety of challenges for the construction industry. Workers will need to develop new skills to handle the complexities of advanced power and cooling systems essential for the operation of massive racks of servers. Planning and construction must account for the unique requirements of AI infrastructure, including higher power densities, liquid cooling systems and optimized layouts. Collaboration between construction teams and AI infrastructure experts will be critical, requiring construction professionals to build a knowledge base in AI technology and data center design. The objective is to be able to deliver facilities that will support current information technology requirements while being flexible enough to meet the exponential growth in computing power required by the ever-expanding AI demands of the future.3

In response to the unique risk management needs of data centers, Zurich has introduced Builders Risk Data Center Project Guard – an innovation designed for the rapidly expanding U.S. data center market. The offering will help address unique construction and early operational risks of data centers from construction to commissioning and handover as well as climate risks.

Sustainable energy

Related to the surge in data center construction, supplying the skyrocketing demands of a global, data-dependent economic infrastructure for steady, reliable power will challenge national electrical grids as never before. Energy producers are making big investments in new and emerging power-generation technologies—including nuclear, geothermal and long-duration energy storage. As demand for safe, reliable power supplies grows, renewables are projected to account for approximately 45-50% of the energy mix by 2030, up from about a third today.4

In 2025, worldwide solar and wind power generation actually outpaced growth in electricity demand. In addition, for the first time on record, all renewable energy sources combined generated more power than coal. In particular, global solar generation grew by a record 31% during the first half of the year, while wind generation grew by 7.7%. In all, solar and wind generation combined grew by more than 400 terawatt hours during the first half, which topped the amount by which global demand grew during the same period.5

Geothermal energy is another green, low-carbon, renewable energy resource using the Earth’s natural heat, which can then be utilized in a variety of applications, including power generation for a host of commercial and residential needs. Global geothermal energy market size was valued at more than $66.24 billion in 2023, and is projected to grow to as much as $117.02 billion by 2032.6

As an organization, Zurich is an advocate of the need to respond to the environmental risks of climate change facing our customers and the world at large. In support of efforts to increase reliance on sustainable, low-carbon energy resources, Zurich provides coverages designed specifically for sustainable energy space, including expanded Delay in Completion coverage to include tax credits and dependent property coverage. We also offer enhanced capacity across all products supporting sustainable energy and have introduced our TEML (Trusted Estimated Maximum Loss) service for fee, unattached to an insurance offering, for insureds who are considering high retentions or loss limits and require an unbiased third-party perspective to help guide terms.

Mass timber

The market for mass timber, one of the most consequential construction innovations in decades, has experienced steady growth around the world as a viable, sustainable, low-carbon alternative for a wide variety of projects. The global market for mass timber construction was estimated at $990.4 million in 2024, and is projected to reach $1.3 billion by 2030.7

Binding multiple layers of engineered wood planks and strong adhesives under high pressure, mass timber is much stronger and more structurally-sound than traditional timber, allowing its application as an alternative to concrete in many applications. Mass timber is strong enough to be used in load-bearing features such as structural panels, beams, and posts, proving this material can indeed be incorporated into large-scale, tall projects. The 284-foot Ascent MKE building in Milwaukee currently holds the title as the tallest mass timber construction in the world. Rising 25 stories, the first six floors are dedicated to amenities, with the remaining 19 floors making up 259 upscale apartments. Use of elements of mass timber has become commonplace in nearly all construction occupancies, including manufacturing and data centers.8

While demonstrably less combustible than light wood-frame construction, the insurance market still largely views mass timber as a more hazardous class of business, setting rates, deductibles and terms in closer alignment to more combustible, traditional wood construction. While mass timber has been used abroad for decades, the challenge in the U.S. is the fact that mass timber construction requires unique expertise and a skill set not yet widely available, including knowing how mass timber should be repaired or replaced in the event of a loss.

Other key risks facing mass timber construction include supply chain disruptions and higher costs due to evolving tariff regimes, since most mass timber components are still harvested and manufactured outside the U.S.

Recognizing mass timber is here to stay thanks to its sustainable features, versatility and carbon-reduction characteristics, Zurich has responded by providing differentiated products for both Mass Timber Project Builders Risk and Master Builders Risk programs, and by raising capacity for mass timber projects to up to $75 million.

Conclusion

No doubt, construction will see the appearance of other innovations and challenges in the years ahead. The expanding role of AI in project design, management and execution will make its mark on future projects, especially as new materials and means and methods come online. New technologies, such as increasingly capable drones and autonomous robots, will more often work side-by-side with human workers, in part as a response to the growing scarcity of experienced workers with in-demand skills being sought by competing megaprojects. And, as has always been the case, changes in broader economic conditions will at times challenge or enhance the outlook for the global construction industry.

The expanding role of AI in project design, management and execution will make its mark on future projects.

Conclusion

No doubt, construction will see the appearance of other innovations and challenges in the years ahead. The expanding role of AI in project design, management and execution will make its mark on future projects, especially as new materials and means and methods come online. New technologies, such as increasingly capable drones and autonomous robots, will more often work side-by-side with human workers, in part as a response to the growing scarcity of experienced workers with in-demand skills being sought by competing megaprojects. And, as has always been the case, changes in broader economic conditions will at times challenge or enhance the outlook for the global construction industry.

The expanding role of AI in project design, management and execution will make its mark on future projects.

References:

  1. Guckes, Michael. “ConstructConnect Report: Record Data Center Construction Spending Surges to $14B.” ConstructConnect News. 3 September 2025.
  2. Noffsinger, Jesse; Goodpaster, Maria; Patel, Mark; Chang, Haley; Sachdeva, Pankaj; Bhan, Arjita. “The cost of compute: A $7 trillion race to scale data centers.” McKinsey Quarterly. 28 April 2025.
  3. Bluhm, Jay. “How AI Data Center Growth is Transforming Construction Demands.” DataCenter Knowledge. 21 May 2025.
  4. Noffsinger, Jesse; Goodpaster, Maria; Patel, Mark; Chang, Haley; Sachdeva, Pankaj; Bhan, Arjita. “The cost of compute: A $7 trillion race to scale data centers.” McKinsey Quarterly. 28 April 2025.
  5. St. John, Alexa. “Solar and wind power has grown faster than electricity demand this year, report says.” Associated Press. 6 October 2025.
  6. Geothermal Energy Market Size, Share & Industry Growth Analysis, By Type (Binary Cycle, Flash, and Dry Steam), By Application (Industrial, Commercial, Residential, and Others) and Regional Forecast, 2024-2032. Fortune Business Insights. 13 October 2025.
  7. Mass Timber Construction Industry Report 2025 | Market to Reach $1.3 Billion by 2030 – Government Incentives for Green Building Certifications Strengthen Business Case for Mass Timber Projects. Research and Markets. 11 September 2025.
  8. Biro, Andrew. “The Top 25 Tallest Mass Timber Buildings in the World.” Green Building & Design (gb&d). 6 January 2025.

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