Wood-based buildings and high-rises are increasingly common around the world. People are even talking about engineered wood becoming the world’s predominant construction material. But insurers need to be aware of the potential downside risks that accompany wood as a building material.

The term engineered wood refers to products manufactured by binding or fixing strands, particles, fibers, veneers or boards of wood with adhesives or other methods to form composite materials. These production processes can overcome natural variations in the wood, resulting in composite panels that consistently meet the structural, thermal, and acoustic standards applied in conventional construction.

Advances in wood-engineered products and fabrication mean that tall timber buildings can have the same, if not better, structural integrity than those built in steel and concrete. Wooden buildings are faster to put up at significantly lower cost, and they are also considerably lighter and more environmentally sustainable than their concrete counterparts.

Despite their obvious benefits, the increasing number - and sheer size - of buildings constructed from engineered wood is a growing concern among insurers. Underwriters are worried about the natural behaviour of wood when it’s exposed to fire, water or moisture, and their fears are intensified by legislators who seem to support a lowering of safety standards in the pursuit of greener construction.

Recent fire losses in the U.S., which involved large wooden apartment buildings, have shown that wood-based buildings represent a high fire load and have a tendency to burn to the ground if the fire is not quickly detected and extinguished.

Even when a fire is successfully put out before the building is damaged to the point of needing to be demolished, there’s no guarantee that the supporting structure will remain as safe as planned in the original construction, even with restoration.

Then comes the question of insulation. To meet energy-saving standards, wooden buildings are often insulated with combustible materials. Fire fighters cannot effectively fight a fire that is spreading inside the wooden walls, ceilings and insulation material; they can only try to prevent a fire from spreading over to the next building. As a result, the affected building burns completely.

Furthermore, extinguishing water can be problematic, penetrating the wood and leading to additional consequential losses. As a rule, wood-based materials and components don’t respond well to moisture and humidity in any situation. Water damage tends to spread more rapidly and remain undetected longer than it does in concrete structures, potentially making a building unsafe or uninhabitable due to extensive rot and mold.

Clearly, wood has many clear and welcome advantages compared with steel and concrete, but it comes with some important risks. And with the number of buildings and “plyscrapers” made from engineered wood materials increasing all the time, it’s essential that underwriters have a thorough grasp of the risks involved.

If you want to find out more about the pros and cons of engineered wood in the construction industry, read my article, “Engineered Wood – The New Concrete on the Block?”