Underwriters of large-scale commercial and residential construction projects face emerging complexity related to the use of advanced construction methods and materials designed to improve energy efficiency.
All levels of government encourage improved energy efficiency of new structures and establish both short-term incentives and long-term minimum requirements, noted Steve Schmelzle, construction and contracting practice leader at Intact Insurance Specialized Solutions.
This pushes developers to adopt new building materials and techniques that meet or exceed the expectations of these governments.
“We find that there is a need to look closely at building materials such as insulated concrete forms, insulated metal panels, exterior insulation finishing systems (EIFS) and [various] engineered forms of solid wood,” he said Canadian underwriter.
“Insulation generally creates combustibility problems. Insurers, through risk engineering and careful underwriting, seek to find solutions around these types of materials,” Schmelzle added.
The alternative, he noted, would be to say “sorry, they’re combustible, we’re not interested,” which isn’t usually a stance insurers want to take.
“The technical reviews will focus on the specific products [and] look up FM rating [an advanced testing and certification standard that includes fire ratings] and for strength ratings, which then allow us to define our capacity, prices, deductibles, guarantees, etc. “, he added.
Construction has gone through a lot of changes in a short time. Schmelzle said that 10 years ago when he started in the construction business, a concrete building was a concrete building and a steel building was a steel building.
“Nowadays, every type of building material is being advanced, and that’s all to have better energy efficiency,” he said.
“In the same way [materials-driven] energy conservation, we are witnessing the introduction of new forms of energy production. It can be something as simple as solar panels on a roof, but as advanced as a geothermal system. [which provides both winter heating and summer cooling].”
Although progress always comes with challenges, Schmelzle said at the end, this is just a new form of equipment; insurers know how to insure boilers and they have a proven track record with cooling towers.
“Geothermal is by no means a new technology,” he said. “But having more buildings to install is a new arena, a new challenge or a new opportunity to provide insurance solutions.”
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