Navigating Emerging Technology Risk in Insurance

22 July 2025

An overview of the Middle Eastern construction landscape

Summary

The construction industry is witnessing a transformative era, marked by the integration of groundbreaking technologies such as Battery Energy Storage Systems (BESS), large turbines, hydrogen plants, carbon capture facilities, and ambitious infrastructure & civil projects. These innovations are redefining the Middle Eastern construction landscape, offering efficiency, sustainability, and scale. However, they also introduce complex risks that can impact the availability of insurance markets willing to underwrite these ventures. With insurance being a key enabler for doing business, partnering with an effective broker becomes critical for successfully navigating this changing landscape.

A lot has been written on how insurance can play a key role in the energy transition, supporting this transformation and creating insurance products to support the development of new technology. However, as there is limited practical guidance available on how companies adopting new technologies can secure appropriate insurance coverage, many organisations struggle to accurately assess their insurance needs during the early stages of a project. Therefore, it is essential for project owners to engage their insurance broker’s technical expertise well before the placement of construction insurances to improve the viability of their project.

Prototypical technology overview

Insurers are increasingly asked to underwrite projects involving technologies they consider prototypical, often due to limited operational history and sparse claims data. Key examples include:

Hydrogen

Whether for production (electrolysers), storage, or distribution, hydrogen projects involve explosion and embrittlement risks. While high-pressure gas handling is familiar to insurers, novel use cases and limited incident data can complicate risk assessment and underwriting.

Carbon capture (CCS)

CCS projects combine high-value assets and long-term environmental exposures. Risks include mechanical failure during construction and uncertainties around subsurface injection (e.g., caprock integrity, groundwater contamination). With few operating CCS plants, insurers often impose conservative limits and strict conditions.

Wind turbines

Large turbines pose logistical (especially offshore) and mechanical risks, from transport and heavy-lift operations to fatigue and weather-related failures. Newer models lack long-term loss data, limiting underwriting confidence and increasing premiums or capacity restrictions.

Modular design

Off-site construction reduces on-site risk but introduces challenges during transport and assembly. Modules may suffer damage in transit or misalignment on-site. Limited precedent with large-scale modular projects pushes insurers to focus heavily on quality assurance/quality control (QA/QC), transport logistics, interface testing and liability allocation.

Battery Energy Storage Systems (BESS)

BESS projects carry high fire and thermal runaway risks during construction and integration phases. Sparse historical claims data for utility-scale BESS fires lead to cautious underwriting, often with capped sub-limits on fire and delay in start-up/ business interruption.

Complex infrastructure

Projects like The Line at NEOM or The New Murabba involve unprecedented design and engineering, concentrating large values and structural complexity. Their scale and novelty make it difficult for insurers to quantify exposure, driving intense scrutiny and bespoke risk treatment.

Challenges for insurers

While there are of course nuances in how to approach individual placements of the above technologies, there are a few core messages that drive the underlying challenge with placing prototypical risks.

Data scarcity: New technologies often lack historical loss data and therefore actuarial loss models are weak, making risk assessment and pricing difficult
Technical complexity: Understanding the intricacies of technologies like hydrogen production or BESS is essential for accurate risk evaluation and may not always be fully understood by the underwriter
Regulatory uncertainty: Evolving regulations can impact project viability and insurance requirements

Risk advisory insights from Gallagher

Framing technical novelty in the context of managed complexity rather than unknown risk can shift perception and improve insurability.

For project developers and owners, the placement of suitable insurances is a key enabler to securing finance and breaking ground on projects employing emerging technologies, therefore picking the right broker with the right technical expertise can make a huge difference on the success of the placement. Some of the ways in which the insurer challenges can be addressed are outlined below.

Data scarcity

While companies can't produce data that doesn't exist, sharing all available and relevant information can significantly improve insurance placement outcomes. Examples include:

Hydrogen Projects: Detail the technology used, its global track record, the credentials of the developer and EPC, mechanical integrity design, and any comparable technology already in operation
Wind Turbines: Specify the turbine models, operational history (hours in use), and highlight key risk controls like lightning and fire protection
Carbon Capture: Distinguish between the process plant and reinjection components. While CO₂ handling involves some unique risks, the fundamental risk is not entirely new and should be presented accordingly
- Support the submission with a qualified risk engineer’s risk mitigation study and Estimated Maximum Loss (EML) calculation
- Consider positioning the reinjection risk with upstream energy markets more familiar with such exposures

Technical complexity

This is a common theme for many technical risks but becomes even more apparent for projects that can be described as new, unproven at scale or not widely deployed in the market. With insurers being primarily concerned with uncertainty around performance, reliability, and failure modes, this complexity increases the perceived risk of loss and makes underwriting more challenging.

Without talking specifically about the nuances of each technology, project owners can take action to help frame prototypical technology in the context of managed complexity rather than unknown risk, shifting perception and improving insurability.

Utilise independent technical risk engineering to validate design standards and risk mitigations and ensure project information is structured into clear phases (design, construction, commissioning, operation) and outline risk mitigation for each stage.
Project owners should be prepared to demonstrate operational readiness by providing details on how the operations team will manage start-up risk, training programs, maintenance strategies, and performance monitoring
Highlight proven elements of the project and showcase the track record of involved parties, even if part of the technology is novel.

Regulatory uncertainty

Many emerging technologies, especially in sectors like hydrogen and carbon capture operate within undefined or changing regulatory environments. For insurers, this raises concerns about delays, liability ambiguity, and compliance risks, which can directly affect project timelines and exposure.

Taking modular design as an example, specifying in the underwriting stage how the liability allocation is split between module manufacturer, the assembler and the designer can bring clarity to this particular risk for insurers.

Other general actions that can be taken to change perception and help insurers write the risk are:

Showing evidence that the project has engaged early and constructively with the relevant permitting and safety authorities. In the underwriting submission, provide a clear roadmap of what permits are required, what stages they will be obtained, and the expected timelines, supported by regulatory consultants if needed.
Address how the project plans to adapt in the event of regulatory shifts, demonstrating foresight and a mature risk management approach. For example building a refinery furnance designed to run on hydrogen relies on the hydrogen network and permits being issued, therefore being able to also run the furnace on more common fuel sources would allow more confidence for insurers in the standalone viability of the project.

Actionable advice from our Risk Advisory team

Fundamentally while there are challenges to placing certain risks in the market, there are clear actionable steps that can be taken to improve the available capacity, pricing and suitability of insurance for prototypical technology.

Select a broker with end-to-end expertise; i.e work with a partner that takes a lifecycle view of risk, offering technical support from pre-placement through construction, into operation and beyond
Engage early with quality information. Provide transparent, well-organized data and clear evidence of mature risk management and mitigation strategies
Ensure your submission clearly distinguishes between proven and novel aspects of the project, and present complexity as a managed element rather than an unknown
Leverage broker advisory services to not only secure placement, but to manage risk through the project’s full lifecycle, addressing enterprise and cyber risk, operatonal readiness and business resilience

If you wish to discuss any of the points raised in this paper, please reach out to us.

Stephen Scott

Divisional Director - Head of Risk Advisory

Dubai