Insurance challenges

Dr Jim Glockling explores the issues raised in RISCAuthority’s white paper on the insurance challenges of new methods of timber construction.

One inevitable consequence of the drive towards net zero will be the increased usage of wood as a structural building component of large buildings, and with it comes the difficulties of ensuring life and building safety, as well
as business continuity. To ensure they are designing and constructing viable buildings that are both sustainable and insurable, those in the construction industry need to understand the insurance challenges of massive timber construction.

Massive, or mass timber construction, uses load-bearing timber products such as cross laminated timber (CLT) panels, laminated veneer lumber (LVL), Glulam and other engineered wood products as a key component in buildings. For the insurer, this presents a number of challenges, including the ways the buildings are assembled, and the additional insured perils that come in to play, especially when tall wood building are considered. These challenges impact the very heart of established insurance principles for assessment and risk measurement, and to the uninformed the level of insurer concern could be mistaken for a knee-jerk reaction to the unknown.

Building insurance into the design

One surprising aspect to the use of mass timber construction is that mere compliance with regulations might no longer be enough to ensure such buildings are buildable. Just as no one would design a car that was uninsurable
or excessively expensive to insure, the same considerations are becoming true for some buildings now that we are using materials more susceptible to fire and water. Insurers need to be able to conclude that the likely scale of
loss in the event of a fire would be less than 100%, and this needs to be considered in the building design. This is not natively assured by compliance with regulations which, in the UK, are devoid of property protection measures, something the FPA has long been in favour of amending.

While the UK’s Building Regulations are responsible for ensuring life safety from fire in both the home and workplace, their single legal purpose for building safety is to ensure the structural stability of the building for long enough to enable a complete evacuation, and the fire service intervention required to facilitate this. The conclusion drawn from this is that once this time period has elapsed, there is no further expectation of the building to resist fire, or regulatory interest in how the event may conclude. Buildings insurance, however, requires an analysis of how the building might perform against fire, and includes the duration beyond safe evacuation to full material and functional recovery.

A clear problem here is that the low bar of ‘evacuation before collapse’ can lead to designs with little intrinsic resilience, yet which are legal and compliant with UK law. The resilience associated with more traditional non-combustible methods of construction was therefore never a requirement, but an incidental by-product of the life-safety solution.

Given the above, it is easy to see that, for some (predominantly combustible) construction methods, compliance with building regulations alone might have little relevance or impact to reduce a loss estimate for property damage and business interruption down from 100%. This will impact an insurers’ appetite and available capacity to insure the building.

Fire safety challenges, water exposure, and the combination of combustible materials and voids are several key areas of concern for timber constructions. Insurers are particularly worried about water damage as leaks occur more frequently than fire and timber is more susceptible to water damage. Concerns focus on the risk of engineered timber products delaminating and the risk of structural deterioration from long term, hidden water seepage.

These challenges are summarised by the insurers that contributed to the recent RISCAuthority white paper: “Whilst the focus is on property protection, we do believe there to be a scale of build where occupants become so distant from a place of safety, and remote from attending help, that assurance of lifesafety may be problematic where the main structure contains combustible materials.”

Challenges from fire and water

For a multitude of reasons water exposure events are prolific in number, take many forms, and incur great cumulative financial loss. Escape of water (EoW) alone is the greatest category of loss in the domestic and residential sector – greater than fire and security combined. Factors dominant to the scale of an individual loss includes the multistorey situation, and the presence of materials susceptible to water damage. Currently it is rare for the structural fabric of the building to be included in this consideration but the prospect of glued composite timber materials in panelised or post and beam form is of concern.

Water exposures may result from flood, weather ingress, short term failure of water bearing systems, long-term low-rate exposures, pooling, and during fire-fighting activities. All have the ability to impact the structural integrity, function, and aesthetics of timber through primary (glue denaturing, delamination, swelling, staining) and secondary (rot, moulds, fungus) mechanisms. The impact of water exposure events is normally assessed as a function of severity and likelihood, rather than as a quantified lossestimate.

With these factors in mind, the white paper highlights what RISCAuthority deem to be the 12 essential principles of escape of water prevention, as outlined below:

  • Principle 1: Follow the identified standards
  • Principle 2: Require competent work
  • Principle 3: Procure quality materials
  • Principle 4: Risk assess for EoW loss
  • Principle 5: Employ detection and minimise consequential damage
  • Principle 6: Facilitate simple repair and maintenance
  • Principle 7: Isolate when not in use (construction)
  • Principle 8: Isolate when not in use (occupation)
  • Principle 9: Limit system pressures
  • Principle 10: Pressure test systems
  • Principle 11: Limit system temperatures
  • Principle 12: Record all information

A further, and significant change that the use of modern methods of construction and timber has introduced is a third dominant potential route for fire spread in combustible voids between the occupied compartments, that may run both laterally and vertically throughout the building, even connecting with the external envelope.

The presence of combustible voids in cavities and roof spaces which allow the unseen spread of fires are perceived as some of the greatest challenges in building safety for insurers, notably:

  • There is no requirement in the UK Building Regulations to prevent fire spread in voids aside from the provision of delaying devices such as cavity barriers (International Building Regulations (US) have much more stringent controls that will stop a fire).
  • Plasterboard, often the primary material defining the separation of fire compartment and combustible void, is an easily penetrated material through deliberate (DIY) and accidental (damage and wear and tear) activities.
  • Fires will spread into combustible voids once the period of resisting effectiveness of protective coverings (such as plasterboard) is surpassed.
  • Voids may contain combustible materials.
  • Once in the voids fires may develop and spread out of reach of normal firefighting control options.
  • Fire service doctrine and equipment can have little impact against this scenario.
  • It is very difficult to determine what will ultimately put the fire out, especially when considering high-rise scenarios.

A possible solution here is for all timber to be encapsulated and protected from fire exposure by gypsum or other materials to resist fire and prevent its spread and any combustible voids should be either lined, sprinkler protected or filled.

These are just a few examples which demonstrate that progress can be made in order to achieve the best route forward to satisfying both property insurers and all stake holders involved in timber construction projects.

A hybrid solution

A possible solution to insurance challenges lies in the hybridisation of traditional and modern building methods and materials. To reduce flood and fire risk, ideally at least half of the structure of multi storey buildings should be non-combustible. The building of the first floor of a mass timber building should be in concrete with concrete floors that alternate with timber floors thereafter. All plant, electrical intake, bathrooms and kitchens should be located in the concrete core and the building should utilise a CLT panel waterproofing membrane which reduces the potential for water damage during delivery and construction before waterproofing.

While every insurer has their own preferences, methods, and risk appetite, by succinctly positioning the insurer viewpoint designers, architects and insurers can collaborate better to address these concerns from a common platform. Already industry is responding with innovative solutions (often hybridisation of new and old building methods and materials) to curtail the risks posed by fire, escape of water, and flood events, but there is no doubt that government could do a great deal more by reviewing Building Regulations to include property protection to assist all.

The white paper also collates the thoughts from leading insurance sector figures around the risk appetite for mass timber construction, alongside potential routes forward and solutions. Though the responses were of course varied in nature, the white paper highlights three common factors:

  • the scale of the proposed building
  • the buildings location
  • who the insurance customer is.

Location in particular can hugely affect the appetite for risk for mass timber construction for a number of reasons. For one, the USA’s International Building Code (IBC) has recently been updated with comprehensive guidance for timber construction methods, whereas the UK regulations are still lagging behind in this regard. The white paper notes that “the weakness of UK building regulation is at best irrelevant, and at worst acts as a deterrent to insurability,” and that “insurance of massive timber buildings is simpler in countries whose building regulations, unlike the UK, embrace the benefits of property protection.”

One route forward discussed is the option of alternating timber with concrete in construction, and the potentiality of installing rooms that function with a higher fire risk (such as kitchens) on concrete floors where possible, which would improve the buildings stability in the event of a fire too, as well as providing a higher level of compartmentalisation and assisting in fire and rescue service efforts.

While this consideration of a hybrid approach of traditional and modern building methods could offer the best route forward for both insurers and the construction industry, “In the longer term, there is a substantial role for government to play in developing Building Regulations that better appreciate the challenges, if more complex construction types are to be embraced.”

RISCAuthority’s white paper provides a definitive description of the insurance challenges of timber construction methods based on insights from 24 major UK insurers. You can download the white paper here.

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Dr Jim Glockling is Technical Director of the FPA and Director of RISCAuthority.