Mass timber has the potential to be a major building component for cities of the future, but while timber is renewable and comes with lower costs and less CO2 emissions, there are downsides in terms of fire, floods, earthquakes and termites. Allianz Commercial takes a closer look at this sustainable building material.
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According to a new Emerging Risk Trend Talk report from Allianz Commercial published on 15 February, 2024, as this market grows and mass timber buildings evolve, the construction risk landscape will also be transformed, bringing with it many risk management challenges for companies.
Michael Bruch, Global Head of Risk Advisory Services at Allianz Commercial, says that, “The 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.”
“However, 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’s 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.”
Hybrid mass timber
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 – the height of the world’s 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 Europe.
Although mass timber currently only represents a small proportion of the overall number of buildings constructed worldwide each year, 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 Wood Products Council, nevertheless, from mixed use developments to hotels and 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 Allied Market Research.
“In 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,” explains Franck Fumat, a Regional Head of Property Risk Consulting at Allianz Commercial. “Off-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.”
Hazards, challenges, loss prevention
As mass timber buildings evolve with greater height and intricate designs, they will pose new challenges in terms of risk mitigation. The report identifies hazards and challenges companies need to be aware of, with Allianz Commercial risk consulting engineers also highlighting several loss prevention measures to consider that could help to reduce their impact.
Fire risk
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 – 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 over a five-year period. 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 is being conducted to develop a methodology for evaluating the performance of structural elements during the entire duration of a fire.
Natural hazards
Damage from natural catastrophes is already the second most expensive cause of construction claims, Allianz 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.
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.
Manufacturing, supply chain
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.
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. Defective products is the third costliest cause of construction /engineering insurance claims.
Workmanship, repair costs
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.
Termite and insect infestation
While not common in all areas of the world, termites and other wood-boring insects may pose a 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.
Download the full Emerging Risk Trends Talk 2 Mass timber report here.
