CHALLENGES OF INSURING MASS TIMBER BUILDINGS
The UK insurance sector’s brokers and insurers are generally supportive of the use of mass timber in the UK. They recognise that increased use of mass timber across the world is an imperative and an enabler to support the construction industry to meet – and to continue to meet - its required net zero commitments. They also recognise the need to meet their own net zero commitments and agree that deploying underwriting capital into mass timber supports their and the construction sectors’ needs. With that comes an appreciation that the use of mass timber will increase. The biggest challenge the insurance sector faces is their own nascent knowledge and the small amount of data available to them compared with more well-known building materials. The comparative lack of data makes it harder for insurers to assess, quantify and underwrite the risk, hence the higher premium rates and less commercially sustainable terms that they currently require. They therefore would welcome more collaboration between contractors, developers, insurers, brokers and risk advisers to share new learning possibilities, acquired knowledge and even to create an industry wide knowledge database for the benefit of all those involved in the use of mass timber. The insurance industry’s view of the use of mass timber in commercial buildings has evolved over the last two years from slightly anti/neutral to neutral/ positive. There is more work to be done by all parties but it would appear that there is now a desire to support greater adoption of the use of mass timber in the UK from the insurance sector. Everything that the construction and property investment community can do to contribute to the reduction in time and cost of remediating reinstating and mitigating the losses, deriving mainly from fire and water perils, will contribute to the long-term sustainability of insurance products and services to support the continued innovation in the mass timber sector. Insurance is essential in the continued innovation and development of the future built environment.
Insurance is an economic necessity, without which innovation, development and progress in everything that supports society would be hampered by the inability of business or government to take the risk of doing anything new. Investors and developers wanting to promote and incorporate mass timber construction often find that the insurance sector is unable to offer insurance that meets their commercial requirements, partly due to insufficient statistical data and partly due to the use of timber being a comparatively new risk in the UK insurance market. The insurance industry does acknowledge the requirement for an increase in the adoption of mass timber if environmental targets and net zero ambitions are to be met, however there are a number of concerns regarding the safety and resilience of mass timber buildings. They seek assurance that these concerns are fully considered, and design measures are put in place so that risks are satisfactorily mitigated. Within the long history of construction, mass timber is a relatively young technology. In the UK, the 21st century building industry and insurance sector remains generally unfamiliar with the dynamics and properties of modern mass timber as an increasingly dominating feature of the modern built environment, which is a much more complex and regulation-driven environment than when timber was last the dominant building resource. There are two primary risks deriving from mass timber construction; fire risk and water damage risk. There are two principal hazards deriving from fire and water risks: safety to human life and the costs resulting from the loss of amenity of a property damaged by fire or water and the reinstatement or remedial cost of the property itself. The insurance industry is required to bear the majority of the burden of these risks and in the early 21st century the insurers do not yet have the reliable long term statistical evidence of the ultimate cost of loss and damage from this source, nor do they have an experienced resource for the remedial works necessary to put the property back into its pre loss condition.
RISK AND RISK GUIDANCE DOCUMENTS
Driven by the necessity to rapidly decarbonise the built environment, over the past few years a sector of the
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