With the global population, urbanisation and demand for properties continuing to grow, global construction levels are set to rapidly increase over the next decade. 

In 2023 alone, the construction industry contributed 2.7% to South Africa’s total GDP. Further, last year’s South Africa Construction Industry report revealed that the compound annual growth rate (CAGR) of the construction industry in South Africa is expected to be at 5.8% between 2023 and 2027, resulting in construction output reaching ZAR267 million by 2027.

The importance and value of this sector to the country’s economy has been made clear by the South African Government. Most notably, the Government’s National Infrastructure Plan 2050, announced in 2022, will pump over ZAR2 trillion into infrastructure development over the next few decades. 

AI and Big Data likely to revolutionise industries 

The insurance construction industry in South Africa is therefore well-positioned to benefit from the rapid growth in the sector. The industry, however, does face a significant challenge when dealing with the huge volume of data each construction project generates, 96% of which is going unused. With the recent rise in technologies that can analyse immense volumes of Big Data, construction insurance providers have been able to better harness this information, providing them with a greater understanding of project risks and allowing them to create tailored solutions for clients. 

The combination of Artificial Intelligence (AI) and Big Data is likely to revolutionise industries across South Africa, and the construction insurance sector is no different. The country is expected to show an annual growth rate (CAGR 2023 – 2030) of 20.64% in the AI sector, resulting in a market volume of ZAR162 trillion by 2030. Furthermore, South Africa was ranked the second highest country in Sub-Saharan Africa on AI readiness in the Government AI Readiness Index 2023, and the only country in Sub-Saharan Africa that scored above average in terms of technological capability. 

Tailoring policies to bespoke needs

The key benefit that Big Data will provide the construction insurance sector is it will allow insurers and brokers to tailor policies to bespoke needs. Investing in robust data collection mechanisms to collect data from a variety of sources, including historical claims data, Internet of Things (IoT) sensors, satellite imagery, weather forecasts and construction project management systems, will allow insurers to access previously untapped information. 

For example, when it comes to construction projects in South Africa, natural disasters including floods, droughts and earthquakes are serious risks for developers. Big Data analytics, however, allows insurers to analyse a wider variety of data sources than traditionally used, including geological surveys and weather patterns. Furthermore, Big Data allows the construction insurance sector to take part in real time monitoring and alerting. Construction insurers can leverage IoT devices to track construction sites in real-time, monitoring potential risks or changes from established norms. Currently, over 60% of Africa is covered by 4G mobile phone networks, and there are an estimated 570 million internet users. By exploiting IoT and creating automated alerted systems, construction insurers can receive notifications about anomalies or significant events in real time, allowing for rapid interventions to mitigate loses. 

Access greater expertise and data sources

Finally, the importance of collaboration in making sure that Big Data fully benefits the construction insurance sector cannot be forgotten. The construction insurance sector must make sure to enhance connections with construction industry stakeholders, such as contractors and engineers, to access greater expertise and data sources. Further, partnering with technology providers will ensure the sector stays up to date with the latest developments in Big Data and incorporate advanced technologies into their services.

You can read the original article on the FA News website