The Role of Insurance in Scaling Mass Timber Construction: Review on Enablers and Shortcomings

Forests play an essential part in nature conservation and restoration, biodiversity, climate change mitigation and especially the transformation to a low-carbon economy. However, practices to manage forest environments and scale the sustainable use of innovative timber products (nature-based solutions (NBS)) in place of grey infrastructure construction materials are proving problematic, mainly due to the real and perceived risks of buildings constructed with mass timber or engineered wood. Insurers can play an enabling role in scaling wood construction practices. Yet currently, insurance - with a few essential exceptions - fails to cover mass timber constructions in a way that make them competitive with traditional grey construction materials. This is mainly attributed to a lack of performance data and perceived fire and water damage risks. We review experience of insurers as they enter the wood and timber sector, focusing on mass timber and standards and guidelines to de-risk the sector. We highlight innovative insurance products and their shortcomings and benefits. We find that while interest in insurance for nature conservation and green infrastructure is increasing, gaps in the role of insurance to enable NBS, like mass timber construction, persist.