Solid wood use poses an emerging risk for the global construction sector | Insurance business America
Building a solid risk management foundation is critical
Civil engineering
By Gia Snape
The demand for solid wood, a sustainable construction alternative, has risen steadily in recent years. However, a new trend poses risks for the construction sector: solid wood is not only used for residential buildings, but also for taller buildings.
According to an expert, this change can be observed in Europe, Asia and North America. Michael Bruch (pictured), global head of risk advisory services at Allianz Commercial, noted that the increasing use of mass timber for high-rise construction suggests broader acceptance of the material beyond traditional low-rise buildings.
“The emergence of mass timber as a sustainable construction alternative represents a significant opportunity for the construction sector to reduce its carbon footprint while meeting the demand for a more cost-effective but equally durable material such as steel and concrete,” Bruch said.
“However, in any industry, the use of new materials or processes can introduce new risk scenarios, potential defects or unexpected safety consequences and bring benefits, and solid wood is no different.”
Shifting construction to solid wood – what are the biggest risks?
Bruch referred to Allianz Commercial’s current report on the risks of solid wood. According to the report, the construction sector is responsible for almost 40% of global CO2 emissions caused by concrete, steel and fossil fuel energy consumption.
Switching to solid wood, a more cost-effective material that is just as durable as concrete and steel, allows the construction industry to reduce its huge carbon footprint. Solid wood emits significantly less CO2: around 50% less than concrete and more than 25% less than steel, Allianz Commercial said in its report.
However, the potential risks in solid wood construction are significant, particularly with regard to the risk of fire and natural disasters.
“The good news from our research is that these risks can be managed,” Bruch said.
Fire is perhaps the biggest risk in solid wood construction. According to Allianz, fire is the most expensive cause of all insurance claims in the construction and engineering sectors, accounting for more than a quarter (27%) of the value of 22,000 claims analyzed over a five-year period.
To mitigate this risk, Bruch emphasized proactive measures such as fire-resistant design, use of flame-retardant materials, and implementation of appropriate construction practices.
He also pointed out that although natural hazards vary by region, the resilience of solid wood structures should not be underestimated.
“Natural disaster risks such as hurricanes and gale force winds can potentially impact beams, columns and panels. But solid wood is really strong,” Bruch said.
“Solid wood buildings weigh about a third of comparable concrete structures and have the highest strength-to-weight ratio, making solid wood perform very well even during seismic activity.
“Natural hazards can vary from region to region, but these risks can be well managed with mass timber buildings.”
Additionally, as demand for mass timber increases, construction companies face supply chain and labor risks. Solid wood must be obtained in a sustainable manner, which requires special production facilities.
“This means that thorough logistical planning and management of construction materials are essential to avoid costly project delays,” Bruch said.
“In addition, construction companies may face the challenge of finding experienced workers for mass timber construction projects. But overall, mass timber buildings can be built quicker than traditional buildings, so that’s a big advantage we see.”
Insurance implications for the construction industry as the use of mass timber increases
The global solid wood market is still in its infancy, but has enormous growth potential, according to Allianz Commercial.
Despite the risks involved, Bruch is optimistic that solid wood has the potential to achieve sustainability goals and reduce emissions. At the same time, effective risk management practices and collaboration with industry are needed to ensure the widespread adoption of sustainable construction materials and technologies.
Brokers and insurers can help construction customers transition to sustainable materials and technologies by providing risk management solutions and investment incentives.
Bruch emphasized that every solid wood building is unique and presents specific risks that must be assessed and managed throughout its life cycle.
“Given the expected future growth of this market, companies should do everything in their power to develop a better understanding of their risks, including fire, water damage, repeat loss scenarios and even termite infestations, and ensure they have effective loss prevention measures in place to to combat these,” said Bruch.
Can you comment on the risks associated with the increasing use of solid wood in construction? Please share your thoughts in the comments.
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2024-04-11 19:21:00
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