Factors influencing the adoption of insurance as a risk treatment tool by contractors in the construction industry

Opeoluwa Akinradewo, Douglas Aghimien, Clinton Aigbavboa, Michael Onyia

Research output: Contribution to journalArticlepeer-review

14 Citations (Scopus)


The major challenge surrounding construction projects are hinged on time, cost and quality, which are all susceptible to uncertainty and have financial implications. As a response to the excessive uncertainty, standard contracts for construction projects demand that contractors indemnify all works associated with a project and the people involved in it through having insurance cover. Even though the consensus that insurance as a primary means of managing risk has expanded significantly, few contractors have adopted it in developing countries. This study set out to evaluate the factors influencing insurance use as a risk response tool for contractors alongside its efficiency in the construction industry. Quantitative research method was adopted to achieve the aim of the study in which a close-ended questionnaire was developed. Respondents were chosen using a purposive sampling technique and they include Architects, Construction Managers, Project Managers, Quantity Surveyors, Engineers and Insurance professionals within Gauteng province. Retrieved data was analysed using descriptive statistics, One-Sample T-test, and exploratory factor analysis. Findings revealed that factors influencing insurance use as risk response tool by contractors can be categorised into project characteristics, financial stability influence, organisational objective influence, insurer’s influence, and insured participants and legal requirement influence. It was also established that insurance is efficient in managing external risks. Based on these findings, it was concluded that project characteristics play a major role in the decision to employ insurance as a tool for managing risk. It was recommended that construction team players and stakeholders should encourage the use of the different insurance covers for construction projects.

Original languageEnglish
Pages (from-to)2484-2492
Number of pages9
JournalInternational Journal of Construction Management
Issue number13
Publication statusPublished - 2022


  • Construction industry
  • construction risk
  • insurance
  • risk mitigation
  • risk treatment

ASJC Scopus subject areas

  • Building and Construction
  • Strategy and Management
  • Management of Technology and Innovation


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