With the ongoing market-oriented reform of the construction industry, the traditional supervision system has increasingly exposed inherent deficiencies, including insufficient independence, misaligned rights and responsibilities, and continuous weakening of professionalism. Intensified low-price competition and significant loss of high-caliber talent have made it difficult for the traditional system to meet the new requirements of high-quality development in the construction sector. Based on Shanghai’s twelve years of practical experience in implementing latent defect insurance for construction quality and work safety liability insurance, this study proposes an in-depth integration of insurance mechanisms into the supervision system to establish a brand-new insurance-supervision model. This model, without significantly increasing the overall cost for construction owners, can comprehensively reshape the core value of the supervision industry and provide a feasible reform path for the transformation and upgrading of China’s engineering supervision industry and for enhancing the effectiveness of construction quality and safety management.