As UK-based construction companies seek to improve their carbon footprint as part of a growing interest in environmental, social, and governance (ESG) efforts, a switch to sustainable materials like timber are being considered. However, a lack of clear UK regulation on the use of timber has meant insurers remain cautious over safety measures. A hybrid construction model is providing a way of making environmentally friendly projects more attractive to insurers.
Do insurers dislike timber?
While timber is seen as a positive step forward in tackling ESG issues, offering a sustainable alternative to concrete, some insurers are currently concerned with the risk factors associated with timber, meaning certain coverages are costing more. Whilst this isn't yet the case as far as professional indemnity (PI) insurance coverage is concerned, we may well see PI insurers follow suit.
The main risks are fire and water-related issues, both of which result from what many see as lacklustre regulation surrounding timber use in construction projects.
- Fire risk: Currently, the fire-related safety of a building is based on ensuring that a building's structure is stable enough to allow occupants to leave the building in the event of a fire. As long as there is sufficient time for evacuation, regulators are satisfied.
However, this timeframe is too narrow to alleviate insurer concerns, as coverage is based on the total cost that fire could have on a property. Insurers therefore look at the risks surrounding projects primarily using timber as high risk, with the material being relatively unprotected if a fire were to break out and spread.
- Water risk: The threat of water related issues is more varied in timber-based projects. Escaped water is the most common of these issues, though flood risk is another major issue for Insurers.
Currently, there isn't a specific regulation concerning water-resilient materials. However, construction projects have usually relied on the same material that is deemed fire resilient. For example, material such as concrete has proven to be as effective in resisting water as it is against fire.
In comparison, Insurers see projects that primarily use timber unfavourably, as the material absorbs water, posing fundamental risk to a building's structure compared to concrete, raising the risk of such projects as insurers look beyond the limit of evacuation that regulators require.
Some have argued that a lack of regulation over how timber is used is the central issue for insurers. RISCauthority, an organisation of UK insurers says that insurers would be able to provide improved coverage for projects if UK regulation could provide greater clarification on how timber should be modified to allow greater resistance to fire and water damage, as US regulators have.
Under the current International Building Code in the US, projects which use large amounts of timber must ensure that:
- All timber is encapsulated
- Any combustible voids are lined, protected with sprinklers, or filled
For Insurers, a move towards a compromise between fire, water protection, and environmentally-friendlier construction, would ease the insurance concerns when tackling the timber issue.
Hybridisation of timber construction
While Insurers remain concerned about the safety of timber in large commercial construction projects, there are routes firms can take to ease apprehension over its use, allowing for an increased use of more sustainable materials, while mitigating the safety concerns associated with them.
- Use a concrete core and base: Using concrete for the first floor of a building, along with its core pillars, would provide far greater protection against water, while also allowing for an increased use of timber for the majority of the building's structure.
- Construct all bathrooms and kitchens in a concrete core: Locating rooms which have water running through them, like kitchens and bathrooms, in a concrete core, will reduce the risk and damage caused by escaped water, and its exposure to timber.
- Confine all electrical intake within concrete cores: Again, using a concrete core to separate wiring and other electrical equipment from bare timber will provide greater fireproofing measures, and may well save a greater portion of a building if a fire were to break out.
The recommendations demonstrate the balance insurers are seeking in construction projects. While a move towards increased timber use is welcomed by insurers on an ESG front, they view it as a dangerous step forward, especially with a lack of clarity from regulators. Projects that demonstrate an understanding of how both fire and water resistant material can be reduced without compromising the integrity of a structure will be better placed from an insurance perspective when using larger quantities of timber for projects.
Given the current issues around cladding and fire safety that are of great concern to PI insurers, a move towards timber should be considered properly with due care and attention to those risk management issues associated with its use.
If you would like to discuss how you can safely introduce more sustainable materials into projects and the impact it may have on your insurance, please contact your Lockton representative.