Amid growing pressure to reduce the construction sector's carbon footprint and improve energy efficiency, the industry is increasingly adopting the use of sustainable materials such as mass timber. To avoid any delays or higher cost of insuring such projects it is crucial to involve insurers early and address underwriters' concerns from the outset.
Mass timber is a generic term, covering products of various sizes and functions, such as glue laminated beams, laminated veneer lumber, nail laminated timber, and dowel-laminated timber. The most familiar form of mass timber is cross laminated timber. To produce it, smaller pieces of timber are glued crosswise in layers, with the grain of each layer facing against the grain of the adjacent layer.
Risk factors for mass timber construction
The increased use of mass timber (or other combustible materials) introduces new challenges to construction projects from an insurance coverage perspective. Unlike other traditional forms of construction – the performance of which are known and understood – more innovative construction methods are less proven and can be met with caution by underwriters.
Fire is one consideration, but it is not the only cause of concern. Insurers also want to understand how a building might react to other perils such as escape of water, storms, and hail. For some insurers, wet peril challenges in mass timber construction may even be of greater concern than those related to fire.
The restoration of buildings following a loss is another factor when it comes to mass timber
construction which may be considered to have increased susceptibility to fire and water exposures compared to some other more traditional construction techniques. The potential
extent of damage, how the damage might be assessed, the supply chain for replacement products and the repair process can influence the time and cost of reinstatement.
Other insurance considerations for mass timber buildings include:
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Occupancy – such as commercial, residential, or mixed use
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Scale – such as building height, size, and separation
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Structure and fabric – such as materials of construction and cladding
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Other risk factors – such as atria, car parks, balconies, swimming pools, hazardous
materials, green surfaces, and renewable energy systems -
Fire mitigations – such as combustible voids and building protection, fire compartmentation, manual firefighting, stairwells
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Water damage mitigation – considering construction, failure of envelope, escape of water, flood, and condensation
Additional factors may also introduce further potential new causes of property loss. For instance, the drive towards sustainability is adding features to our buildings, such as photovoltaic systems, battery energy storage systems, electric car charging points, green walls and roofs, blue roofs, and more. While these features have documented environmental credentials, they may also present new ignition sources, routes for fire spread or other potential losses.
Add to this recent major losses, such as the Grenfell Tower, and there can be challenges when arranging insurance during both construction and use of a building.
Addressing potential concerns
Help is at hand. May 2023 saw the release of the Mass Timber Insurance Playbook (MTIP)
with new guidance, designed to support all parties on 'how to secure an equitable insurance policy for both the construction and operation of mass timber buildings'. Organised by the
Alliance for Sustainable Building Products (ASBP), the document is based on feedback from key individuals and companies, including insurers.
Any given building project involves a wide range of stakeholders, from the client, designer, and architect, to insurers, the broker, lender, fire service, fire engineer and building control. Each of these stakeholders bring their own perspective and priorities may not (initially) align. The MTIP seeks to address this, helping stakeholders in the insurance and construction industries to understand each other's priorities and language.
In so doing, the hope is that its use can enable constructive communication, and help overcome gaps in understanding that would otherwise hold back mass timber construction.
Outlining the key design stakeholders, the document summarises the challenges that need to be addressed, the key differences between life safety (regulatory considerations) and property protection (business and insurer considerations) and Estimated Maximum Loss, a concept used by insurers to determine their potential exposure.
It also provides guidance sheets, based on established frameworks such as the Royal Institute of British Architects (RIBA) stages, suggesting risk mitigation and insurance actions. The process starts with 'Strategic Definition' – undertaking early consultation and establishing the motivation for using mass timber. Early broker engagement is also recommended, mapping out the planned strategy with insurers and working in partnership throughout the project stages.
Risk mitigation mechanisms for timber construction
Below is a non-exhaustive selection of potential risk mitigation measures which could be considered:
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Construct ground floor areas from concrete to increase resilience to flood, escape of water and arson
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Manage the risk of combustible voids such as lining with non-combustible board, sprinklers or filling with non-combustible fibre insulation
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Provide a fire suppression system (such as sprinklers) to a standard accepted by property
insurers -
Provide features to encourage firefighter access and effectiveness
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Construct the building above the highest predicted flood level. Where this is not possible, utilise water resistant materials and place essential services at higher levels
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Place areas at higher risk of escape of water such as bathrooms and kitchens within a water resistant core
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Utilise water detection devices to quickly identify and control water events
This article is included in the latest edition of the Lockton Risk Radar magazine.
For further information, please visit the Lockton Risk Control page, or contact:
Mark Middleton, Risk Management Executive Risk Control Services
E: mark.middleton@lockton.com