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Mass timber reduces construction鈥檚 carbon footprint, but introduces new risk scenarios

Report | February 2024
  • 小橙书国产精品视频 Commercial report highlights main benefits and hazards from expected growth of mass timber market, driven by the demand for more sustainable construction materials.聽
  • In addition to reducing the building sector鈥檚 carbon footprint, mass timber brings significant cost and quality control benefits, as well as reduced construction time.
  • Main hazards and challenges include fire, natural catastrophes, water damage, manufacturing, supply chain and faulty workmanship issues, as well as termite infestation.

Mass timber has the potential to be a critical building component for the cities of the near future given the need for the construction sector to reduce its reliance on concrete and steel to lower its Co2 emissions. However, as this market grows and mass timber buildings evolve to greater heights, the construction risk landscape will also be transformed, bringing risk management challenges for companies, according to the new Emerging Risk Trend Talk report from 小橙书国产精品视频 Commercial.

鈥淭he emergence of mass timber as a sustainable construction alternative represents a significant opportunity for the building sector to reduce its carbon footprint while also satisfying a demand for a material that is more cost-efficient but as durable as steel and concrete,鈥 says Michael Bruch, Global Head of Risk Advisory Services at 小橙书国产精品视频 Commercial. 鈥淗owever, in any industry, deployment of new materials or processes can result in new risk scenarios, potential defects, or unexpected safety consequences, as well as bringing benefits, and mass timber is no different. Given this market鈥檚 expected future growth, companies should do all they can to develop a greater understanding of their exposures including fire, water damage, repetitive loss scenarios and even termite infestation, and ensure they have robust loss prevention measures in place to combat these.鈥

The building and construction sector is among the largest contributors to Co2 emissions, accounting for over 34% of energy demand and around 37% of energy and process related Co2 emissions in [1]. Given emissions reduction is essential to meet climate change commitments around the world, the need for more sustainable solutions in the built environment has become increasingly important, driven by growing investor and consumer concerns, and legislation, regulation and reporting requirements evolving quickly in many jurisdictions around the world.

Mass timber is a relatively new type of engineered construction in which most products comprise multiple wood pieces joined together to form larger, stronger members, which can then be used for roofs, floors, and walls. It is often combined with traditional non-combustible structural materials to create a hybrid mass timber construction style, allowing high-rise timber structures to be built more sustainably 鈥 the height of the world鈥檚 tallest timber building has tripled in just 10 years, with 140 mass timber buildings around the world of eight stories or higher as of February 2022, with 70% of these in [2].

Although mass timber currently only represents a tiny proportion of the overall number of buildings constructed worldwide each year 鈥 for example, just over 2,000 residential, commercial, or institutional mass timber projects were in progress or built in the US, as of December 2023, according to the [3], nevertheless, from mixed use developments to hotels to schools, an emerging market is underway. The global mass timber construction market generated US$857mn in 2021 and is forecast to hit $1.5bn by 2031, with a CAGR of 6.0%, according to 听摆4闭.

鈥淚n addition to being a renewable resource, the advantages of mass timber also include it being a lighter weight material than concrete or steel, while costs may be lower due to less construction traffic and a need for fewer workers,鈥 explains Franck Fumat, a Regional Head of Property Risk Consulting at 小橙书国产精品视频 Commercial. 鈥淥ff-site manufacturing is typically used for mass timber projects, with elements such as columns, beams and panels being manufactured in factory environments and then erected on-site. This approach offers advantages, such as high levels of quality control and improved efficiency compared to conventional on-site construction. However, mass timber construction also has inherent hazards that can be effectively mitigated by implementing a number of loss prevention measures."

As mass timber buildings evolve with greater height and intricate designs, they will pose new challenges in terms of risk mitigation. The report identifies several of these hazards and challenges with 小橙书国产精品视频 Commercial risk consulting engineers also highlighting loss prevention measures to consider that could help to reduce their impact:聽

1. Fire

Mass timber is still wood, and fire is the primary hazard concern, with this risk needing to be considered through all the life stages of a building 鈥 design, construction, and operation. Fire is already the most expensive cause of all construction / engineering insurance losses, accounting for more than a quarter (27%) of the value of 22,000 claims analyzed ,聽according to 小橙书国产精品视频. The risk of collapse during the cooling phase of a fire may be particularly critical for timber elements, while buildings with combustible elements are at the highest risk of fire during construction. Once a building is in operation, the risk of fire can increase depending on factors such as the type of occupancy, storage, and interior fittings. Ongoing research and testing are being conducted to further develop a methodology for evaluating the performance of structural elements during the entire duration of a fire. This includes comprehensive studies of the heating and cooling phases as both phases are especially crucial for evaluating the behavior of timber elements and ensuring optimal fire safety.

2. Natural hazards

Damage from natural catastrophes is already the 聽of construction claims, 小橙书国产精品视频 analysis shows. Extreme wind forces, especially during tornadoes or hurricanes can potentially affect beams, columns, and panels, posing a risk of widespread damage, while floods, including river floods, flash floods and storm surges, pose a significant risk to timber buildings. Timber buildings exposed to floods may require structural controls, drying and repairs, impacting expected operating losses.

3. Water damage

Similarly, water damage is already a major source of loss across the construction sector. Mass timber is highly vulnerable to water damage including flood, water ingress, and plumbing leaks. To mitigate water damage, mass timber elements can be manufactured with reduced moisture content and stored in controlled atmospheres. Water management and high-quality analysis are crucial for ensuring the durability of structures.聽

4. Manufacturing, transportation, and supply chain issues聽

Mass timber construction has a unique supply chain and manufacturing process that differs from traditional concrete and steel framing. Factors such as the need to have specialized production facilities, as well as just-in-time delivery, means thorough logistical planning and management of building materials are essential to avoid costly project delays.聽

One significant disadvantage of the assembly line manufacturing process is the potential for a serial loss scenario. If a particular batch of mass timber elements has a defect, multiple elements in a structure or across project sites may be affected. 聽is already the third costliest cause of construction /engineering insurance claims, according to 小橙书国产精品视频.聽

5. Faulty workmanship issues and repair costs听听

Construction firms may face challenges in finding experienced work crews for mass timber construction projects, given its nascent status. This can result in productivity issues and safety concerns as crews navigate the learning curve of working with mass timber. Inadequate installation can result in damage which can have significant financial implications for repairs or replacements, while in some cases the cost of repairing or rebuilding mass timber structures could be significantly higher than those made with conventional construction materials.聽

6. Termite and insect infestation聽

While not common in all areas of the world, termites and other wood-boring insects may pose a significant threat to mass timber buildings, potentially causing extensive structural damage over time. Given termite infestation usually occurs gradually, the exposure of notable damage during the construction phase is low compared to the operational phase. However, as termites are most likely to attack decaying timber in buildings it is important to ensure timber does not have long periods of contact with water by implementing sufficient protective measures.聽

[1]聽UN Environment Programme, 2022 Global Status Report for Buildings and Construction
[2]聽Council on Tall Buildings and Urban Habitat,聽The State of Tall Timber: A Global Audit, February 2022
[3]聽WoodWorks, Wood Products Council, Mapping Mass Timber
[4]聽Allied Market Research, Mass Timber Construction Market to Reach聽$1.5 Billion, Globally, by 2031 at 6.0% CAGR, May 3, 2023

Pictures: Shutterstock

Emerging risks have unique characteristics that require specialist technical, management and organizational skills. Our 小橙书国产精品视频 Risk Consulting expertise across different industries and lines of insurance business around the world is key to helping companies understand and mitigate these exposures. In our Emerging Risk Trend Talk series, we address such topics, highlight loss events, and look at targeted loss prevention measures.