Is the insurance sector failing to keep up with the emerging mass timber construction market?
Speaking at the recent “Timber Talk Series 3—Building Ontario’s Global Leadership: Harnessing the Potential of Ontario’s Forest Products” event, Mark Gaglione of construction services company EllisDon pointed to high premiums and limited capacity for securing insurance for mass timber projects.
According to Gaglione, builder insurance is up to six times pricier for mass timber construction compared to the usual properties made of steel and concrete. Additionally, single insurers normally have a $20 million limit, prompting the need for multiple providers to insure one project.
ConstructConnect quoted Gaglione: “It removes all of the bid tendering and drives the price up even further.”
Much of the problem stems from a lack of familiarity in Canada and the US, with insurance companies “reluctant” to provide cover for mass timber buildings.
During the panel discussion in Ontario, Gaglione pointed out that large insurers with a global presence and a better understanding of mass timber construction can help lower the price of insurance in Canada.
According to Allied Market Research, the global mass timber construction market is projected to be valued at US$1.5 billion by 2031. The industry, which is already experiencing significant growth, is expected to grow at an even faster pace in the coming years, driven by the construction sector’s sustainability push.
If the insurance industry is unable to play catch-up, as current trends appear to suggest, mass timber construction will continue to face coverage challenges, which could be a missed opportunity for insurance companies.
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