Insurance News:
Regulatory Change and the Future of Construction Insurance

The UK construction industry stands on the brink of significant transformation as a wave of regulatory changes takes effect under the new government. For brokers and underwriters, understanding these shifts is crucial, not only to maintain compliance but also to remain competitive in a market that is both demanding and full of opportunity.

Anticipated Regulatory Shifts in 2025

Several major regulatory developments are shaping the landscape in 2025. The Procurement Act 2023, which came into force in October 2024, has streamlined public sector procurement by consolidating multiple regulations into a single, more accessible framework. This is expected to simplify processes for firms engaged in public projects, but it also raises the bar for compliance and transparency, particularly for those bidding on government contracts.

Building safety remains a top priority, with the Building Regulations (Minimum Standards) Bill 2024-2025 introducing new minimum quality and energy efficiency standards for all new builds. The government has also reinforced its commitment to building safety through the establishment of the Building Safety Regulator (BSR) and the National Regulator for Construction Products (NRCP), both of which are tasked with overseeing compliance and raising standards across the sector. From September 2026, further mandatory requirements for higher-risk buildings are set to come into force, and the government is expected to introduce additional reforms in response to ongoing safety concerns.

The Construction Products Reform Green Paper 2025 proposes a risk-based general safety requirement for all construction products, closing existing regulatory gaps and ensuring that all materials used in projects are properly assessed for safety before entering the market. Stronger sanctions, including both civil and criminal penalties, are being considered for manufacturers that fail to meet these standards.

Implications for Construction Insurance

These regulatory changes are set to impact construction insurance in several ways. As compliance requirements become more stringent, insurers will likely demand greater evidence of regulatory adherence from insured parties, particularly around product safety, building standards, and procurement practices. The introduction of new safety and quality benchmarks may also lead to revised underwriting criteria and the

development of bespoke policies to address emerging risks, such as those associated with modern methods of construction and sustainability initiatives.

Rising wage costs, skills shortages, and increased tender costs—exacerbated by regulatory changes—will continue to drive up construction costs and, consequently, insurance premiums. Insurers and brokers must adapt quickly, ensuring that clients are not only compliant but also adequately protected against the evolving risk landscape.

What Brokers Should Watch For

To stay compliant and competitive in 2025 and beyond, brokers should:

· Closely monitor regulatory updates, including the implementation timelines for new acts and standards.

· Advise clients on the importance of robust documentation and evidence of compliance, particularly when bidding for public sector contracts or working on higher-risk buildings.

· Work with insurers to develop or access policies tailored to the new regulatory environment, including enhanced coverage for building safety, product liability, and sustainability risks.

· Prepare for increased scrutiny from regulators and insurers, particularly regarding the use of innovative materials and construction methods.

· Support clients in navigating rising costs by identifying opportunities for premium reductions through risk management and compliance excellence.

Looking Ahead

While the regulatory environment is becoming more demanding, these changes are designed to foster a safer, more transparent, and more resilient construction sector. Brokers and underwriters who stay ahead of these developments—by deepening their regulatory knowledge, adapting their offerings, and supporting clients through the transition—will be well-positioned to thrive in a more balanced and robust market.

As the market evolves, Exance remains committed to supporting brokers and underwriters with up-to-date insights, tailored insurance solutions, and practical guidance to help them navigate regulatory change and deliver value to their clients.