Green Construction: The Role of New Materials In Risk and Insurance

The rise of green construction and its challenges 

The construction industry is undergoing a significant transformation driven by the need to decarbonise and meet ambitious net-zero targets. Innovations in materials and building techniques are accelerating, with projects incorporating low-carbon concrete, sustainable steel, plant-based paneling, and other alternative materials. At the same time, the rise of renewable infrastructure projects—such as offshore wind farms, hydrogen storage, and large-scale battery energy storage systems (BESS)—adds another layer of complexity to the industry’s risk landscape. 

While these developments present immense opportunities, they also introduce unfamiliar risks. Insurers, by nature, take a conservative approach to risk assessment, requiring thorough analysis and historical data before extending coverage. The challenge is that many of these materials and techniques are new to the market, lacking the long-term performance data insurers rely on. This hesitancy can lead to projects becoming uninsurable—or at least facing stringent terms—if insurance is only sought at the later stages of development. 

Insurance market realities: the need for early engagement 

A key challenge in green construction is the lack of historical claims data on new materials and methods. Unlike traditional construction materials such as steel and Portland cement concrete—whose risks are well understood—many sustainable alternatives remain largely untested in large-scale projects. As a result, insurers often apply cautious underwriting, leading to restricted coverage or higher premiums. 

This uncertainty makes it crucial for contractors, developers, and owners to engage insurers as early as the conceptual stage of a project. Providing comprehensive risk assessments and collaborating with suppliers on product testing all play a role in ensuring project insurability. 

“Early client engagement with brokers and markets benefits projects. Integrating the process holistically from start to finish is important. Involving insurers at the feasibility and design stages makes the project insurable and potentially lowers their total cost of risk.” Vincent Banton, Aon 

By integrating risk mitigation discussions into early planning, project stakeholders can proactively address insurers’ concerns. This includes collaborating with risk engineers, gathering performance data, and structuring projects in a way that enhances their insurability. Engaging insurers at an early stage enables a structured approach to risk transfer, ultimately leading to better terms and pricing. 

Understanding the risk factors: lessons from the market 

Several key risk factors influence the insurability of green construction projects: 

• Material performance and durability – new materials such as low-carbon concrete and alternative cement formulations such as pulverised clay, are gaining traction. However, their long-term quality control and consistency  remains a key concern for insurers. 

• Fire and structural integrity risks – innovative materials like plant-based panelling and mass timber are increasingly being used in construction. However, fire resistance and durability testing must be thoroughly documented before insurers feel confident underwriting these projects. 

• Supply chain uncertainty – many green materials rely on specialised production processes and have limited suppliers. This can lead to cost volatility and potential project delays—both of which increase perceived risk. 

• Regulatory and compliance uncertainty – different APAC markets have varying regulatory requirements for sustainable construction, impacting how insurers assess risks. While markets like Singapore enforce strict green building standards, other regions are still catching up. 

“Although green materials can reduce the carbon footprint of projects, they may increase material risk for the insurance market. Builders, operators, manufacturers, and suppliers should aim to provide sufficient historical data, testing, and performance guarantees on these products to facilitate their insurability in the markets.” Vincent Banton, Aon 

Looking ahead: the future of green construction and risk transfer 

As the adoption of sustainable materials grows, early engagement with insurers is essential to ensure that projects remain financially viable. Aon plays a critical role in bridging the gap between material innovation and insurability: 

• Risk advisory and early consultation – we help clients assess the insurability of new materials before project commencement. 

• Market engagement – Aon works closely with insurers and risk engineers to establish underwriting confidence in emerging construction methods. 

• Risk engineering and testing support – we collaborate with clients to conduct material performance testing and engage third-party risk engineers to validate new construction techniques. 

• Global insights for local projects – with expertise spanning multiple regions, Aon provides clients with insights on how green construction trends are unfolding worldwide, helping them anticipate market shifts and insurer expectations. 

As the industry moves towards greener building solutions, proactive risk management is essential. For more insights on managing risks in sustainable construction, contact Aon’s specialist team today. 

Vincent Banton
Head of Construction & Infrastructure, Asia
+65 8112 6875
vincent.banton@aon.com