Management Consulting
Aon
Full Credential Description
Construction projects in the EMEA region are increasingly affected by extreme heat, leading to significant project delays and rising costs. During extreme heatwaves, construction projects involving physical labor can take, on average, 36 percent longer to complete. This issue is exacerbated by the lack of specific legislation regarding acceptable temperature conditions for outdoor work in many countries, leaving workers vulnerable to heat-related health risks. The consequences of extreme heat are severe, with heat-related deaths surpassing those from other weather-related dangers, and indirect health issues such as respiratory failure and heat stroke becoming more prevalent. To address these challenges, parametric insurance has emerged as a flexible solution that can help mitigate the risks associated with extreme heat. Unlike traditional insurance, which often excludes heat-related exposures, parametric insurance provides coverage triggered by predefined parameters, allowing for quicker and more transparent claim settlements. This approach not only helps bridge the protection gap but also offers contractors and building owners the agility and efficiency needed to manage the economic implications of extreme heat, such as business interruptions and loss of employee income. The implementation of parametric insurance has shown quantifiable benefits for construction stakeholders. It reduces contingencies in contract prices, mitigates income loss from delays, and facilitates access to capital to cover additional costs, ensuring that projects remain on schedule. By adopting parametric solutions, construction companies can enhance their resilience against the escalating risks posed by extreme heat, ultimately leading to improved operational efficiency and worker wellbeing.