Bid for taller wood structures raises red flag for one insurer

Given a recent movement afoot to increase height limits for wood frame buildings in Canada, property insurance underwriters need to be wary of writing risks for such structures, an expert with one insurer notes.

A private members’ bill (Bill 19) tabled on March 22 would allow wood frame buildings up to 14 storeys in Ontario. Sponsored by Progressive Conservative MPP Vic Fedeli, the bill comes four years after Ontario raised the height limit on wood frame buildings to six storeys from four storeys. Fedeli’s bill aims to create jobs in Northern Ontario and to reduce construction costs.

Wood buildings taller than 10 storeys include the Brock Commons student residence at the University of British Columbia and the 13-storey Project Origine condo tower in Quebec City.

Placing insurance for a tall wood building is “definitely something that deserves a second look” from an underwriter, said Louis Gritzo, vice president and manager of research with Rhode Island-based insurer FM Global. He spoke to Canadian Underwriter in an interview Thursday.

“There are a number of challenges around this that are underwriter-beware things,” he said. “Sprinklers are just an absolute necessity.”

Also, some architects designing tall wood buildings “want those (wood) beams to be exposed because they look nice,” Gritzo added.

Some risk can be mitigated by the type of material used. For example, cross-laminated-timber materials (CLT) “perform very well” in fire resistance tests, Gritzo said. Canadian forest industry association FPInnovations describes CLT as a “multi-layer wooden panel” where each layer is perpendicular to the adjacent layer.

The challenges of CLT include testing the materials. On the one hand, CLT materials might “char only slightly” in a fire, Gritzo said. On the other hand, they “could perform very poorly,” with the binding holding the wood together coming apart during a fire.

CLT is “resistant to ignition” under test conditions, Eileen Ho, director of commercial property underwriting at Northbridge Insurance, told Canadian Underwriter in 2017.

In Canada, building codes are a provincial responsibility but the National Research Council has model building and fire codes which are updated every five years. In general, depending on the province, builders can sometimes get special permission from municipal authorities to deviate from the building codes.

In 2015, the National Model Building Code was changed to raise the height limit on residential and office-type building to six storeys (up from four) using combustible materials.

In Ontario, Bill 19 is the latest attempt by Fedeli to raise the height limit for wood buildings.

In place of wood, steel is another option for building material.

“Steel has had standards out for a long time,” added Gritzo. “There are certain compositions of steel and they can be made in certain ways and an architect will call for a certain type of steel and there is a certification process.”

Whether or not tall wood buildings would cost more to insure than concrete and steel, “these are things that deserve a closer look,” said Gritzo.