Artificial Intelligence (AI) Reduces Insurance Costs for Construction Industry; know how?

Accompanied by the high accidents rate to 40% according to the Hong Kong Labour Department. Over 23% accidents from fall from height and 15% from machinery accidents have been recorded by a scholar article. Due to the severe accidental rate, the insurance cost to workers’ compensation or liability insurance, etc. has increased significantly.

For general liability insurance, contractors and construction businesses pay an average premium of about $825 each year. To reduce the regular expense of the construction industry, the unnecessary expense on construction sites can be prevented by applying Artificial Intelligence (AI) and Computer Vision (CV).

Let us explain you that why AI is important in reducing construction insurance? And, how to apply AI in the construction industry?

What is construction insurance and how does it matter?

Construction insurance could be a combined name of assorted varieties of insurance policies that cover areas of property damage, third-party injuries or damage claims. As there are sudden sorts of risks related to construction projects, from natural disasters like floods, hurricanes, earthquakes to crime, arson, civil disorder. As a contractor, he/she has a responsibility to ensure the workers are protected with the proper types of insurance coverages, including commercial general liability, umbrella/excess liability, professional liability, builders’ risk, and workers’ compensation etc. For instance, the contractor’s all-risk coverage (a.k.a. builder’s risk coverage) is an insurance that protects the building during its construction against damages and losses that might occur. As the building owner normally gets it to protect their interests, a general contractor is not always required to pay for the coverage. However, contractors can be held responsible for any loss. Therefore, it is a decent idea to possess some type of liability insurance together with contractor’s all-risk coverage.

For small contractors

In small construction projects, the problem of compensation for workers’ work-related accidents is even more complicated, and workers are not covered by work-related injury compensation. Due to the small number of projects in the construction industry, the skyrocketing insurance premiums even account for 20% to 30% of the total project cost, which is overwhelming for small contractors. As a result, there have also been cases in which insurance companies refuse to underwrite, which has caused some small and medium-sized enterprises to be unable to operate and close down, affecting the employment opportunities of workers and forcing workers to be "self-employed". In addition, employers within the industry try not to afford the high insurance cost, once a work-related accident occurs, workers cannot get the work-related injury compensation they deserve.

By drawing danger zone

By using AI, construction companies can prevent workers from entering danger zones or any restricted areas, and protect them against injuries by an instant alert system powered by vision intelligence. From ABC News, with the employment of AI, a reduction of $30 million in savings on a $500 million project can be achieved by saving equipment and manpower. About 70% efficiency can be increased according to data collection.

Insurance cost can be counted as direct or indirect cost. For the situation that the premium is based on that specific project, and the policy runs the duration of the project, it would be charged as a direct cost. On the other hand, insurance costs such as workers' compensation insurance, which a contractor is required to carry, would be considered as an indirect cost. With reference to a university report, the direct cost including insurance in one construction project is around 50%, such as medical expenses, sick leave, sudden accidents or hospitalization etc. According to ProQuest Dialog, the most frequent construction insurance program is personal accident and workers' compensation, about 85%, the second most popular is third party for 55%, others include 50% contractors' all risks, 40% employer's liability etc. With the reduction in accidents rate, the cost of one project can absolutely be reduced.

So, viAct’s AI enabled construction management tool is here to help construction industry by drawing danger zones to prevent workers from entering dangerous areas. viAct is now also keen to work with construction companies from all over the Asia and major areas like China, Singapore, Japan, Australia, Vietnam and Indonesia in order to overcome the construction site accidents and workforce shortage problems majorly faced by these areas.

According to Semantic Scholar, the current accident rate like cut/caught in or vehicle crash led by mistakes of entering the danger zone can be reduced from 30% to less. The indirect overhead cost borne by injuries and his/her family can be reduced by more than 70%.

By detecting personal protective equipment (PPE)

The application of AI can help identify workers who are not wearing proper safety measures i.e., helmets, and high visibility jackets in construction sites. From BNamericas, one of the largest construction projects is the 2018 Hidroituango hydropower dam in Colombia under construction. It is projected to cost insurers around US$1.4billion, making it one of the largest construction claims. It is indicated that large engineering and construction projects have changed beyond recognition in recent decades, resulting in much higher values and increased complexity. Such projects are typically very high value – the largest cost in the tens of billions of dollars – and can run for many years, even decades. Raymond Hogendoorn, Global Head of Property and Engineering Claims at AGCS claimed that larger and higher-valued construction site projects are being conducted nowadays, for instance, power plants, international airports, etc. From Allianz, with more and more technology and complicated machinery in factories and offices, values per square meter have also increased significantly. For instance, the expansion of Al Maktoum International Airport in Dubai will not complete until 2030 and is predicted to cost $36billion. As a result, sums insured are now much larger, from around $5billion to $10billion. By applying AI, the accident rate will be reduced by over 50%, as well as the insurance cost.


With the help of danger zone instant alert and PPE detection, AI can surely help eliminate construction company’s insurance costs by reducing the accident rate and increasing safety level. Last but not least, viAct is also providing free demos for AI construction monitoring and danger zone supervision.

Get the FREE DEMO for your construction sites here