QBE Insurance has published its Australian Construction Sector Outlook report, which examines the economic uncertainties affecting the sector and underscores the importance of proactive risk management to address these challenges.
A key focus of the report is supply chain resilience. Disruptions from the COVID-19 pandemic, international conflicts, and trade issues have highlighted the need for effective contingency planning.
Mitigating Supply Chain Risks in the Australian Construction Sector
Dale Gleeson, General Manager of Elders Insurance and Heavy Industries at QBE Australia Pacific, stressed the importance of staying informed about geopolitical developments and considering alternative procurement strategies to manage supply chain risks and minimize disruptions.
“Given that global supply chain disruptions are expected to persist, understanding the structure and geographic concentration of suppliers can help businesses identify and address vulnerabilities within their supply chain,” Gleeson noted. “We recommend diversifying suppliers and ensuring quality control when engaging new suppliers, as poor-quality supplies may lead to complications.”
He also emphasized the need to assess suppliers’ financial stability, location, transportation methods, and affiliations to ensure compliance with sustainability targets.
Risks in the Australian Construction Sector
The report highlights additional risks such as higher interest rates, which have slowed new building activity and increased labor and material costs, along with a significant rise in skilled labor shortages since the pandemic.
“The Australian construction sector faces a range of challenges and opportunities that are transforming the industry. Developing a culture of preparedness is crucial for navigating this evolving environment. By understanding emerging risks and opportunities, businesses can better position themselves for the future,” Gleeson said.
Importance of Insurance in the Australian Construction Sector
Since 2019, QBE has observed a 130% increase in average claim sizes across contract works policies for construction companies, emphasizing the importance of reviewing insurance coverage as part of risk management strategies.
“At QBE, we collaborate with customers and brokers to identify and address unique risks and develop tailored mitigation strategies to build resilience,” Gleeson added. “We encourage businesses to consult with their insurance broker to ensure they have appropriate coverage for their specific risks.”
The Australian Construction Sector Outlook report, prepared by Oxford Economics and Control Risks for QBE Insurance, is available on the QBE website.
Additionally, QBE has recently enhanced its claims support services by applying insights gained from the 2022 east coast floods and recent severe weather events.
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