The Challenge of Engineering: Insuring Capital Projects

As the new year begins, government initiatives like A Future Made in Australia and the private sector are looking to invest tens of billions of Australian dollars in significant capital projects across Australia, with a focus on renewables. Passed in Parliament last year, the government initiative (also known as The Guarantee of Origin project) promises to invest AU$22.7B over the next decade.

Likewise, a host of Australian organisations including the Australian Council of Trade Unions, Australian Conservation Foundation, Climate Energy Finance, Rewiring Australia and the Smart Energy Council, and the Australian Renewable Industry Package (ARIP) have called for AU$100B boosting the renewables sector to be invested over the same period.

A key emphasis for these investments will be on engineering new technologies within a broad spectrum of industries geared toward cleaner energy and sustainability.

Key Areas of Investments

The green and sustainability project pipeline includes engineering designs for mining rare earth metals and green metals, enabling the manufacture of solar panels, wind turbines, electric vehicles, and batteries. Green investments will also include projects for processing renewable hydrogen and low-carbon fuels.

These major manufacturing investments will need engineering solutions to address aging infrastructure and ensure workplace safety. Australia can also expect a transformation in digital automation with engineering companies adopting advanced technologies like artificial intelligence (AI), machine learning, robotics, and the Internet of Things (IoT).

The Need for Full-Scale Insurance Solutions 

As these investment forecasts make clear, Australia’s engineering industry is pivotal in shaping Australia’s infrastructure and economy. However, the sector faces numerous risks, including potential project derailments, financial impacts, and threats to public safety.

Knightcorp can help define these risks and implement appropriate insurance measures, which are critical for engineering firms and industry professionals alike. A number of policies have proven particularly useful to clients, including: 

• Professional Indemnity Insurance: Engineers often face legal claims related to errors, omissions, or negligence in their designs and services. In an evolving landscape the risks associated with intellectual property infringement also increase, an additional intricacy in a complex world. Professional indemnity insurance protects them from the financial consequences of such claims, including legal costs and compensation payouts
• Contractor’s All Risks (CAR) Insurance: For construction and infrastructure projects, CAR insurance can cover physical damage to works, plant, and materials on-site during construction. This is crucial for protecting against the financial impact of damage or loss during the build phase.
• Public and Product Liability Insurance: Engineering firms can mitigate risks related to third-party property damage or injury caused by their activities. This insurance protects firms from potential claims for incidents that occur on-site or from products they manufacture or design.
• Workers’ Compensation Insurance: In addition to the statutory requirement of workers' compensation coverage to protect staff from workplace injuries or illnesses. Knightcorp can guide you through the Employee Benefits landscape, including EA-related and union agreements, Executive coverage, and Inpat/Expat Insurance. Complemented with Claims & Injury Management services, health, safety & well-being strategies, and programs bringing together insurance and wellness solutions to protect your people.  Given the high-risk nature of engineering, notably in the construction and industrial sectors, this is a critical area of risk management.
• Environmental Liability Insurance: For projects that involve environmental concerns (e.g., waste management, pollution control), environmental liability insurance covers the cost of damage to the environment, including cleanup and legal costs. This is increasingly important as regulatory scrutiny around environmental practices is on the rise.
• Cyber Liability Insurance: As engineering firms adopt more digital tools, they face a heightened risk of cyber threats. Cyber liability insurance helps firms manage the costs of data breaches, system hacks, or other cyber incidents, covering legal fees, notification costs, and business interruption.
• Business Interruption Insurance: This coverage can protect engineering firms from the financial impact of delays caused by unforeseen events, such as natural disasters, supply chain disruptions, or significant operational interruptions.
• Supply Chain Insurance: Given the vulnerability of engineering projects to supply chain disruptions, insurance products that protect against delays and cost overruns due to material shortages or supplier failures can be critical in ensuring the financial viability of projects.

A Trusted Advisor

Knightcorp can help engineering firms by conducting a rigorous risk assessment within specific operations and projects to determine the most relevant insurance solutions. We can then craft a holistic program that protects your core assets and allows you to conduct your pioneering work with confidence.

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DISCLAIMER: This information is provided to assist you in understanding the risks, implications, and common considerations for your industry.  It does not constitute advice and is not complete. Please contact Knightcorp Insurance Brokers for further information.