CBPM 2025 · Vol. 2025, Issue 1

Effectiveness of Existing Insurance Frameworks in Addressing the Risks of Contractors

Sarpong O.S, Modupe Cecilia Mewomo, Francis Kwesi Bondinuba, Nansie A and Dery B. A

Keywords: Keywords: Contractors' Risk, Insurance frameworks, Risk management, Industry Challenges and Collaborative Approaches.

Abstract

The construction industry is inherently risky and involves risks of project delay and cost overruns, safety issues, and contractual disputes. Therefore, these risks require insurance frameworks to address the unique challenges contractors face. This study used a critical analysis to show how existing insurance frameworks mitigate risks associated with construction projects. The study employed a mixed-method approach and used 100 contractors with 15 industry experts for the qualitative study by purposive sampling. The study reveals significant gaps in the adaptability and inclusiveness of existing insurance products, particularly in addressing emerging risks such as cyber threats and environmental liabilities. The results indicate that the effectiveness of existing insurance frameworks in addressing contractor risks varies significantly across different policy types. Cyber Liability Insurance for Construction Firms and Environmental Liability Insurance rank among the most effective, reflecting the industry's growing awareness of digital threats and environmental risks. The qualitative analysis revealed that many contractors face financial challenges due to limited coverage options for specific risks, such as delays or project-specific liabilities. Future research was recommended to explore contractors' specific challenges in accessing and utilising insurance coverage, particularly for policies with lower effectiveness ratings, such as Employers' Liability Insurance and Group Personal Accident Insurance.