APAC engineering insurance opportunity grows, but risk mitigation must come first: Swiss Re

Asia’s infrastructure boom offers insurers fresh business, but complex projects risk cascading losses and potential gaps after construction. Swiss Re’s Jimmy Lim tells SIRC Today. 

Key points:
Engineering risks demand mitigation
AI and renewables drive cover demand
Infrastructure projects grow more complex

Investment in data centres, advanced manufacturing, energy and major infrastructure is driving fresh demand for engineering insurance, as well as wider opportunities in property, machinery, business interruption and liability as new assets become operational, says Swiss Re’s Jimmy Lim.

“The scale, concentration and interdependence of systems are changing the risk landscape,” Lim, head of engineering for APAC, told SIRC Today.

“We are also seeing new technologies being incorporated, adding a further dimension to how re/insurers understand and manage risk.”

Traditional infrastructure remains an important growth engine in Southeast Asia and India, where transport, tunnels, ports, utilities and urban construction continue to expand. Investment is moving into semiconductor fabrication, advanced manufacturing, digital infrastructure and renewables.

Swiss Re Institute estimates that construction of physical AI and data centre assets and supporting infrastructure could generate $91 billion in premiums globally between 2026 and 2030. Renewable energy could account for a further $111 billion over the same period across generation, grids, battery storage and associated infrastructure.

Concentration risk

The challenge is extending from just individual assets in isolation to how projects, infrastructure and supply chains interact.

Projects are becoming “larger”, “more capital-intensive” and increasingly interconnected, Lim said, with shared dependencies on power, water, telecommunications, transport and specialist suppliers.

“A data centre depends on electricity generation, transmission, substations, cooling, water, telecommunications and technology supply chains,” he explained. “Disruption in one part of the system can therefore cascade into other parts of the project, the supply chain or the wider economy.”

Limited operating and loss histories for newer technologies can also make performance, failure behaviour and maximum losses harder to estimate. 

Lim said that reinforces the need for “detailed engineering information, transparent data, testing, monitoring” and a clear understanding of how different systems interact.

Geographic accumulation adds another concern. Infrastructure tends to cluster around access to land, power, water, transport and skilled labour, potentially putting significant concentrations of value in areas exposed to typhoon, flood or earthquake. He pointed to offshore wind capacity in Guangdong and Fujian and semiconductor fabrication in high-seismic-risk areas of Taiwan.

“With very large projects, risk may need to be shared through layered and syndicated programmes involving several insurers and reinsurers,” Lim suggested.

Across the lifecycle

Insurance requirements also change materially over the life of a project. During construction, cover may centre on erection risks, marine cargo, contractor liabilities, surety and delay in start-up. Once an asset begins operating, the emphasis shifts towards property damage, machinery breakdown, business interruption, contingent business interruption, cyber and liability.

Lim highlighted a potential gap that may not become apparent until much later.

“Crucially, we have found that construction defects can emerge years after a building is completed, causing significant structural damage and financial losses,” he said. 

“This would neither be covered by traditional construction insurance – which generally ends at project completion – nor property insurance, leaving property owners unprotected and exposed to losses.”

Protecting the “long-term integrity and value” of physical assets is particularly relevant for projects in India, Taiwan and Vietnam, he added.

The transition into operation can also cause the value at risk to rise rapidly as high-value equipment is installed and dependencies on power, cooling, telecommunications and specialist suppliers become more prominent.

That, he said, places greater emphasis on “probable maximum loss, accumulation analysis” and understanding how disruption can spread through shared physical and digital systems. Accurate asset values and realistic repair, replacement and recovery assumptions are also critical.

Mitigation first

Natural catastrophe exposure makes those assessments even more important. 

“In APAC, infrastructure investment is taking place alongside significant exposure to earthquakes, floods and tropical cyclones,” Lim said. “The sequence is to understand and quantify the risk, reduce it through design and operational measures, and then transfer the residual risk.”

Swiss Re Institute research finds that properly designed dykes and levees can reduce flood damage by 60% to 90%. At individual sites, protection can include raising electrical systems and critical machinery, installing flood gates, increasing pumping capacity and protecting utility penetrations.

“Credible mitigation can improve the quality of the risk and provide greater confidence in deploying capacity.”

Supply-chain constraints can further increase loss severity. Transformers, turbines, battery systems, cooling equipment and semiconductor machinery may require remanufacture, testing, certification and international transport before replacement.

Those delays can mean “higher repair, replacement and ultimately claims costs”, Lim said, making knock-on effects and potential concentrations important to both underwriting and resilience planning.

“For insurers and reinsurers, credible mitigation can improve the quality of the risk and provide greater confidence in deploying capacity,” he said. 

Jimmy Lim is the head of engineering for APAC at Swiss Re.

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