From data centers to LNG plants, today’s mega construction projects require sophisticated approaches to risk mitigation and transfer that bring together underwriting expertise and claims insight from the earliest stages.
The scale of construction projects across North America has reached unprecedented levels. Data centers that once felt massive at $1.5 to $2 billion are now eclipsed by $30 billion mega projects, while industry professionals casually label $12 to $15 billion builds as “mini-megas”. Alongside this data center boom, the surge in energy infrastructure — from liquefied natural gas facilities to next-generation nuclear plants to expansive renewable energy installations — is pushing construction volume and complexity to new heights.
For risk professionals and insurance carriers, these projects present a unique combination of familiar construction hazards and emerging exposures that demand a fresh approach to underwriting, risk control and claims management.
“We’re seeing a significant increase in the volume of construction projects across multiple sectors,” said Jean Kim, Vice President, Excess Casualty Retail, Construction Practice Leader and Central Region Manager at Sompo. “Data centers are prominent, but there has also been an increase in the energy source supplying these data center campuses: LNG plants, nuclear plants, and renewable energy.”
Beyond energy and data infrastructure, the construction landscape is being reshaped by major transportation initiatives — rail expansions, roadways modernization, bridge replacements — as well as advanced manufacturing facilities such as semiconductor plants and EV battery factories. Large distribution centers for major retailers add yet another layer to the surge.
What ties these diverse projects together is not just their size, but their integrated complexity. Developers are no longer approaching work as isolated initiatives. Instead, they are combining multiple projects into single, massive undertakings.
“A lot of times when you’re building, the projects just keep getting bigger and more complex — there’s just more to them,” Kim said. “Instead of tackling one project at a time, they’re combining several together. It’s like we were going to fix three miles but now let’s do 12 and include the overpasses, bridges, and everything else while we’re at it.”
This shift from standalone projects to multi-layered, multi-year mega programs is redefining the risk environment. And it’s only the beginning.
Complex Exposures Emerge from Scale and Speed
The risks surrounding today’s mega projects extend well beyond the traditional construction hazards the industry is accustomed to managing. Skilled labor shortages and supply chain challenges remain persistent concerns, but the convergence of construction with advanced technology infrastructure has introduced entirely new categories of exposure that many stakeholders are still learning to navigate.
Steve Lokus, Head of Construction Claims at Sompo, has witnessed firsthand how data center projects can generate claims scenarios that would have been unthinkable a decade ago.
“One of the areas I’ve been directly involved with is the intersection of construction risk and intellectual property claims, situations where warehouses are storing proprietary software, data, and similar assets,” Lokus said. “In one past claim, we were the construction insurer, and the allegation was that the developer/general contractor/owner had essentially stolen an entities trade secrets, posted them online, and attempted to profit from them.”
Geography adds another layer of complexity. Many data centers are being built in rural areas that straddle multiple state lines, creating jurisdictional challenges when incidents occur.
“You may have a data center in Louisiana, but everybody’s being housed in Mississippi or a surrounding state,” Lokus said. “Knowing case law and choice of law becomes critical because if a worker is injured while on the job site or driving home from the job site, it may cross various state lines.”
The growing use of modular construction, especially prevalent in data center development, further complicates the claims landscape. When components are manufactured off-site and transported for installation, determining where responsibility lies for defects becomes significantly more difficult.
“You’ve got the added complication of figuring out whether it’s a product defect, a transportation issue, a construction claim or an installation claim,” Lokus said. “When a property damage occurs, determining where the responsibility actually lies can get pretty complicated.”
The pressure to bring projects online quickly compounds these risks. For data center developers, speed to market is a critical competitive factor, but that urgency creates inherent construction hazards.
“Now we’re taking what used to be just a warehouse — a wall, a roof, a floor, maybe some basic support structures — and loading it with millions of dollars’ worth of equipment and water,” Lokus said. “That’s just an inherently risky combination.”
Weather-related risks also loom large, particularly in southern states where hurricane patterns have become increasingly unpredictable.
“The hurricanes are pushing farther inland now ,” Lokus said. “Being at the forefront — using technology to track weather patterns and understand construction-related risks — is something we focus on and do every day.”
Technology and Collaboration Drive Effective Risk Mitigation
Managing risk on projects of this magnitude requires construction firms to amplify traditional safety practices while embracing a new generation of technologies. Wearable devices, AI-powered monitoring systems, and sophisticated identification protocols are becoming standard tools across major job sites.
“There’s always going to be a plan, but this is where a lot of the new tech really comes into play — the wearables, the Internet of Things, the smart vests, the cameras,” Kim said. “Those tools are only going to become more and more central.”
These technologies are helping bridge the skilled labor gap by enabling better oversight of workers with varying experience levels. Visual identification systems — such as colored-coded vests for experienced workers versus those new to a job site — enable supervisors to allocate resources appropriately and monitor less experienced personnel more closely.
AI-driven monitoring capabilities have also evolved significantly beyond drone-based surveillance, which dominated safety discussions five years ago.
“Now there’s just so much more AI-driven monitoring that can actually help,” Kim said. “We can now track the workers’ health in real time — are they fatigued, do they need more water — and that matters when they’re climbing ladders and operating heavy equipment.”
Camera systems now deliver real-time data to safety managers across sprawling job sites, enabling rapid response to emerging hazards.
The contractors securing these mega projects tend to be highly sophisticated organizations with robust risk management infrastructure already in place.
“Many of the GCs on these projects are the larger firms,” Lokus said. “They have on-site facilities, so if somebody does get injured, there’s a nurse or similar support on-site. There are a number of preventative measures in place to help keep the job running smoothly.”
These large general contractors also exercise significant care in vetting and selecting subcontractors, often bringing in specialized teams from other regions with proven experience with similar projects.
A Collaborative Approach to Underwriting and Claims
As a carrier with deep expertise in construction risk, Sompo has developed a distinctive approach that integrates claims insights into the underwriting process from the earliest stages — a practice that proves particularly valuable on complex mega projects. Rather than treating underwriting and claims as separate functions, Sompo brings these disciplines together for a unified view of project exposures.
“We’re all learning. It’s called a data center boom because it’s just happening so fast,” Kim said. “So yes, we’re learning as we go, but we’re also working to keep a full 360-degree view, consulting with Steve on claims and collaborating with our risk-control specialists.”
This integrated model brings underwriting, claims, and risk control into a single conversation, allowing for a comprehensive evaluation of a project’s risk. When evaluating a specific opportunity, the team looks beyond construction techniques to consider jurisdictional nuances, community sentiment, and environmental factors that could shape or influence future claims outcomes.
“Recently, our underwriting group reached out regarding a mega-project evaluation noting, ‘Hey, we’re interested in learning more about this specific jurisdiction and what potential problems we may have,’” Lokus said. “I was able to bring in defense counsel, coverage counsel, and a risk manager who specialize in that area. In a very short time, we were able to answer two key questions: A, if so, do we want to write it given the venue and B, where do we want to be in the tower of coverage?”
There is a claims team at Sompo dedicated exclusively to construction, with specialists focused on bodily injury, construction defect, and third-party property damage. This depth of specialization not only strengthens underwriting decisions but also ensures more effective claims handling when incidents occur.
“It’s refreshing to see claims have a real seat at the table,” Lokus said. “That alignment between risk management, underwriting, and claims is critical on projects of this scale to ensure everyone is on the same page and fully understands the risks.”
Looking ahead, as data centers continue to proliferate and energy infrastructure investment accelerates, the construction industry will increasingly rely on insurance partners who understand both the familiar, traditional construction hazards and the emerging exposures these projects present.
For risk managers navigating billion-dollar construction programs, working with carriers that bring together technical underwriting knowledge with practical claims and risk control experience provides a critical foundation for managing uncertainty in an era of unprecedented project scale.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 801.641.8304, or email experts@adviseandconsult.net.