Engineering Insurance Under Pressure: A Sector Adapting to Change

In this episode of the COVER podcast, Tony interviews Mark Barrow, Executive Head for South Africa and National Marketing Manager at Mirabilis, for a deep dive into the fast-evolving world of construction and engineering insurance. Mark outlines key industry changes that have reshaped underwriting dynamics, including sluggish economic growth, oversupply in the small-to-medium project space, and the entry of new, undisciplined market players. These have led to unsustainable pricing models, putting pressure on long-term viability.

The discussion covers how South Africa’s underwriting market is adapting to the boom in renewable energy, despite the lack of historical loss data and the limits imposed by sovereign credit ratings. Mark explains the increased role ESG factors play in shaping reinsurance appetite—especially for large-scale, carbon-intensive infrastructure projects.

Global volatility, including currency fluctuations, inflation, and supply chain disruptions, is forcing underwriters to take a more forward-looking approach. Mark also discusses the challenges of treaty renewals, where reinsurers are pulling back through reduced capacity and stricter conditions.

Despite this, Mark remains optimistic, citing international investment in mining, the resilience of South African contractors, and the rise of public-private partnerships. He also speaks to Mirabilis’ success across Africa, driven by centralised underwriting, local partnerships, and deep regional understanding. This is a must-listen for anyone involved in underwriting, construction, or infrastructure development.

Key Takeaways

• Market Pressures: Oversupply in small-to-medium projects and new market entrants have led to unsustainable pricing and weakened underwriting discipline.

• Reinsurance Challenges: Global reinsurance markets are limiting capacity and tightening treaty terms, driven by cumulative losses from global events.

• Renewable Energy Risks: The renewable energy boom lacks long-term loss data, forcing underwriters to learn through experience.

• ESG Impact: Environmental, social, and governance criteria are playing a larger role in underwriting and reinsurance decisions.

• Growth Areas: Mining infrastructure, international investment, and public-private partnerships offer avenues for growth.

• African Expansion: Mirabilis’ centralised model and technical expertise support successful operations across the continent.

• Skills Drain: Declining government spend is leading to skilled personnel leaving the sector, creating long-term capability risks.

• Hope in PPPs: Public-private partnerships are seen as a promising avenue for unlocking infrastructure growth in South Africa.