Willis report reveals construction sector challenged by uptick in data centers for AI while facing labor shortages
Willis (WTW) has released its Global Construction Rate Trend Report for Q1, highlighting significant challenges in the construction sector. The industry is experiencing a surge in data center projects driven by AI advancement, but faces severe labor shortages and rising material costs.
In North America alone, an estimated 500,000 new workers are needed to meet construction demand, with similar shortages reported in Europe, Latin America, and Asia. The labor scarcity is leading to quality and safety concerns, prompting increased scrutiny from insurers.
Recent California wildfires have caused $32-40 billion in insured losses, affecting over 16,000 structures, which is expected to drive up insurance premiums. However, the Builders' risk and Construction All Risk (CAR) insurance market shows resilience with stabilizing rates and increased capacity for larger risks.
Willis (WTW) ha pubblicato il suo Rapporto sulle Tendenze delle Tariffe Globali nel Settore Edile per il primo trimestre, evidenziando sfide significative nel settore delle costruzioni. L'industria sta vivendo un aumento dei progetti di data center, spinti dai progressi dell'IA, ma deve affrontare gravi carenze di manodopera e l'aumento dei costi dei materiali.
Solo in Nord America, si stima che siano necessari 500.000 nuovi lavoratori per soddisfare la domanda di costruzione, con carenze simili segnalate in Europa, America Latina e Asia. La scarsità di manodopera sta portando a preoccupazioni riguardo alla qualità e alla sicurezza, spingendo a un maggiore controllo da parte degli assicuratori.
Recenti incendi in California hanno causato perdite assicurate tra $32-40 miliardi, colpendo oltre 16.000 strutture, il che si prevede porterà a un aumento dei premi assicurativi. Tuttavia, il mercato dell'assicurazione per i rischi dei costruttori e dell'Assicurazione Tutti i Rischi in Costruzione (CAR) mostra resilienza con tassi in stabilizzazione e capacità aumentata per rischi più grandi.
Willis (WTW) ha publicado su Informe sobre las Tendencias Globales de Tarifas de Construcción para el primer trimestre, destacando desafíos significativos en el sector de la construcción. La industria está experimentando un aumento en los proyectos de centros de datos impulsados por los avances en IA, pero enfrenta graves escasez de mano de obra y aumento en los costos de materiales.
Solo en América del Norte, se estima que se necesitan 500,000 nuevos trabajadores para satisfacer la demanda de construcción, con escasez similar reportada en Europa, América Latina y Asia. La escasez de mano de obra está generando preocupaciones sobre la calidad y la seguridad, lo que lleva a un mayor escrutinio por parte de los aseguradores.
Los recientes incendios en California han causado pérdidas aseguradas de entre $32-40 mil millones, afectando a más de 16,000 estructuras, lo que se espera que impulse el aumento de las primas de seguros. Sin embargo, el mercado de seguros de riesgo de constructores y de Seguro de Todos los Riesgos en Construcción (CAR) muestra resiliencia con tasas estabilizándose y una mayor capacidad para riesgos más grandes.
윌리스 (WTW)는 1분기 글로벌 건설 요율 트렌드 보고서를 발표하며 건설 부문에서의 주요 도전 과제를 강조했습니다. 이 산업은 AI 발전에 힘입어 데이터 센터 프로젝트가 증가하고 있지만, 심각한 인력 부족과 상승하는 자재 비용에 직면하고 있습니다.
북미에서만 500,000명의 신규 근로자가 건설 수요를 충족하기 위해 필요하며, 유럽, 라틴 아메리카 및 아시아에서도 유사한 인력 부족이 보고되고 있습니다. 인력 부족은 품질 및 안전 문제를 초래하고 있으며, 이는 보험사로부터의 더욱 엄격한 검토를 촉발하고 있습니다.
최근 캘리포니아의 산불로 인해 $320-400억의 보험 손실이 발생했으며, 16,000개 이상의 구조물에 영향을 미쳤습니다. 이는 보험료 상승을 초래할 것으로 예상됩니다. 그러나 건축가의 위험 및 건설 모든 위험(CAR) 보험 시장은 안정적인 요율과 대규모 위험에 대한 증가된 용량으로 회복력을 보여주고 있습니다.
Willis (WTW) a publié son Rapport sur les Tendances des Tarifs de Construction Mondiaux pour le premier trimestre, mettant en évidence des défis significatifs dans le secteur de la construction. L'industrie connaît une augmentation des projets de centres de données, propulsée par les avancées de l'IA, mais fait face à de graves pénuries de main-d'œuvre et à la hausse des coûts des matériaux.
Rien qu'en Amérique du Nord, on estime qu'il faut 500 000 nouveaux travailleurs pour répondre à la demande de construction, avec des pénuries similaires signalées en Europe, en Amérique Latine et en Asie. La pénurie de main-d'œuvre entraîne des préoccupations concernant la qualité et la sécurité, incitant à un contrôle accru de la part des assureurs.
Les récents incendies de forêt en Californie ont causé des pertes assurées de 32 à 40 milliards de dollars, affectant plus de 16 000 structures, ce qui devrait entraîner une augmentation des primes d'assurance. Cependant, le marché de l'assurance des risques des constructeurs et de l'Assurance Tous Risques en Construction (CAR) montre une résilience avec des taux stabilisés et une capacité accrue pour des risques plus importants.
Willis (WTW) hat seinen Global Construction Rate Trend Report für das erste Quartal veröffentlicht, der erhebliche Herausforderungen im Bauwesen hervorhebt. Die Branche erlebt einen Anstieg von Datenzentrumprojekten, die durch den Fortschritt der KI vorangetrieben werden, sieht sich jedoch mit schweren Arbeitskräftemangel und steigenden Materialkosten konfrontiert.
Allein in Nordamerika wird geschätzt, dass 500.000 neue Arbeitskräfte benötigt werden, um der Bauanforderung gerecht zu werden, während ähnliche Engpässe in Europa, Lateinamerika und Asien gemeldet werden. Der Arbeitskräftemangel führt zu Bedenken hinsichtlich Qualität und Sicherheit, was zu einer erhöhten Überprüfung durch Versicherer führt.
Die jüngsten Waldbrände in Kalifornien haben versicherte Verluste zwischen 32-40 Milliarden Dollar verursacht und mehr als 16.000 Strukturen betroffen, was voraussichtlich die Versicherungsprämien in die Höhe treiben wird. Der Markt für Bauherrenrisiken und die Bau-All-Risk-Versicherung (CAR) zeigt jedoch Resilienz mit stabilisierenden Raten und erhöhter Kapazität für größere Risiken.
- Insurance market showing resilience with stabilizing rates
- Increased capacity for larger construction risks
- Improving rates and terms for quality risks in Asian markets
- Growing demand for data center construction projects
- Critical shortage of 500,000 workers in North America alone
- Rising building material costs increasing project expenses
- Insurance premium increases due to $32-40B California wildfire losses
- Labor shortages leading to reduced construction quality and safety concerns
Insights
This Willis report highlights a double-edged sword for WTW's construction insurance business. The surge in data center construction driven by AI represents a significant growth opportunity for their specialty insurance lines, potentially expanding their premium base. However, this is counterbalanced by escalating risk factors that could pressure profitability.
The identified labor shortages across global markets - particularly the 500,000 worker deficit in North America - creates quality control and safety compliance issues that directly impact underwriting assessments. Willis is strategically positioning itself as a risk management partner rather than just an insurer in this environment.
The $32-40 billion in losses from California wildfires affecting over 16,000 structures serves as a sobering reminder of the natural catastrophe exposure in the construction insurance market. This will likely drive premium increases but also requires careful capacity management.
What's promising is the stabilization in Builders' Risk and Construction All Risk (CAR) markets with increased capacity for larger risks, suggesting disciplined underwriting is maintaining market equilibrium despite these pressures. The Asian market recovery mentioned provides geographic diversification advantages for Willis's global portfolio.
WTW's strategic emphasis on specialized industry knowledge positions them well to navigate this complex risk landscape while potentially capturing premium growth from the data center construction boom without overexposing themselves to the concurrent risk factors.
The intersection of AI-driven data center construction and severe labor constraints creates a challenging operational environment with significant implications. The critical shortage of 500,000 workers in North America alone represents a fundamental capacity constraint that will drive project delays, cost overruns, and quality control issues.
What's particularly noteworthy is how this construction boom is catalyzing adjacent infrastructure investment, especially in energy production. The push toward sustainable sources like solar, wind, and green hydrogen, alongside interest in Small Modular Reactors, demonstrates how data center development is reshaping multiple construction subsectors simultaneously.
Material cost inflation exacerbated by recent tariff increases creates a compounding effect on project economics. Developers face a triple constraint of labor scarcity, material cost volatility, and insurance premium pressure - all while racing to meet accelerating demand for data processing infrastructure.
The insurance market's response of increased scrutiny on project schedules and costs is entirely rational given these pressures. However, the report's mention of stabilizing rates and increased capacity for larger risks suggests the market is adapting rather than retreating.
For WTW, this environment presents opportunities to leverage their specialty knowledge in an increasingly complex risk landscape. Their positioning as expert navigators through these constraints could drive client acquisition and retention, though the overall construction market faces significant headwinds that will moderate growth potential.
LONDON, March 24, 2025 (GLOBE NEWSWIRE) -- The global construction industry is experiencing a remarkable uptick in data center projects, propelled by the swift pace of technological advancement and the future demands of artificial intelligence (AI). However, this boom is set against the sobering reality of labor scarcities and escalating material expenses, which present formidable obstacles for both the construction and insurance domains, according to the latest Willis Global Construction Rate Trend Report for Q1, launched by Willis, a WTW company (NASDAQ: WTW).
In North America, the skilled labor shortage is reaching critical levels, with estimates suggesting that an additional 500,000 new workers are required to meet the pending construction demand. Similar labor shortages are a growing problem in Europe and Latin America, while in Asia, the shortage of skilled labor is particularly acute. These shortages can lead to poor quality construction and reduced adherence to safety protocols, prompting insurance markets to closely scrutinize project schedules and costs.
Other key findings highlighted
- Economic factors are also playing a significant role in the global construction insurance market.
- The ongoing rise in building material costs is pushing project expenses upward, resulting in increased insurance premiums and the recent surge in tariffs, particularly for construction material imports and exports, is anticipated to further amplify these cost pressures.
- Recent natural disasters, such as the fires in Los Angeles, have had a significant financial impact on the construction insurance market. Insured loss estimates from the California wildfires range from
$32 t o$40 billion , affecting over 16,000 structures. This is anticipated to result in insurance premium rate increases for construction projects in California and add pressure to the already strained labor and building material markets.
In the face of these obstacles, we are still witnessing encouraging developments within the global construction insurance sector. The Builders’ risk and Construction All Risk (CAR) insurance market is displaying resilience, with rates stabilizing and increased capacity for more extensive risks. In Asia, we are seeing a market that is on the mend, offering improved rates and terms for quality risks.
Bill Creedon, Global Head of Construction, Willis said “The global data center boom is not only transforming the technology landscape but also catalyzing investments in the energy sector, with a strong emphasis on sustainable energy sources like solar, wind, and green hydrogen. Moreover, the nuclear industry is increasingly exploring the potential of Small Modular Reactors (SMRs) to power these facilities. Nonetheless, we are witnessing a robust response from the insurance market, with a continued emphasis on meticulous underwriting to address the evolving technological landscape. With our unique specialist industry knowledge and expertise, we continue to help our construction clients navigate through this difficult business environment.”
The report can be downloaded here.
About WTW
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Media contact
Sarah Booker:
Sarah.Booker@wtwco.com / +44 7917 72240
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