A recent trend in the fire service is an increase in fire severity, even as frequency decreases. There are many reasons for the trend, such as the use of new construction materials, building in wildland-urban interface (WUI) zones, and the modern contents of homes and commercial buildings.
One major consideration is the construction of “green” buildings, a practice that’s increasing in popularity and frequency.
Building green is driven by environmental concerns, financial incentives, and a growing consensus that it’s a benefit to society. Going green minimizes the effect of the built environment through the efficient use of resources, reductions in waste and environmental discharges, and a focus on health and wellness.
Building green is a trend that the commercial insurance industry will need to contend with as more properties are developed in this manner. It’s an admirable initiative with short- and long-term benefits, but it’s not without risks. It’s important that insurers understand those risks and underwriters manage them effectively—and profitably.
Building green involves environmentally responsible processes that are resource-sufficient for the building’s life cycle. It’s a decision that must be made at the beginning of the process when the structure is sited and continues through design, construction, maintenance, renovations, and deconstruction. Building green minimizes energy use, integrates renewable energy, safeguards water resources, preserves nature, and connects and enhances communities.
According to a report from Navigant Research, from 2013 to 2020, green building materials will more than double in annual market value, from $116 billion to $254 billion worldwide. The trend is driven not just by new commercial construction but also by the retrofitting of existing buildings.
The Green Building Council predicts that from 2015 to 2023, investment will grow to more than $800 billion to update existing structures within the United States. The World Green Building Trends’ 2016 survey reported that 44 percent of respondents said they’re doing more than 30 percent of construction projects green, and 58 percent said they’ll meet that goal of 30 percent or more by 2018. Thirty-nine percent of respondents said green buildings will make up more than 60 percent of their screened projects by 2018.
The risk factors for insurers stem from many of the components used in building green. This article will focus on the four primary components: lightweight wood construction, exterior wall assemblies with combustible components, photovoltaic (PV) systems (solar panels), and vegetative roofs.
Lightweight wood construction
The practice of lightweight wood construction began in the early 1970s and uses lightweight engineered lumber (LEL) as basic building material. LEL is more economical and easy to work with in roof and floor supporting systems. The assemblies have less mass than regular lumber and are an efficient use of resources. Examples of LEL assemblies include trusses with gusset plates, premanufactured I-beams, glue-laminated beams, I-joists, structural composite lumber, structural insulated panels, and wood structural panels.
The main risk of LEL is that it reduces structural performance under fire conditions. In joint research by UL and the Chicago Fire Department, tests of simulated fire conditions indicated that lightweight construction assembly collapsed in 6 minutes versus 18.5 minutes for traditional wood assemblies. Other research showed that lightweight wood construction collapsed 35 percent to 60 percent faster than conventional solid wood assemblies.
Although insurers need to consider construction and fire risk issues when underwriting any commercial property, building green can heighten and exacerbate those risks. More scrutiny is needed for factors such as the presence and percentage of lightweight wood construction on floors and roof areas and whether the building has an appropriately designed and installed sprinkler system.
Exterior wall assemblies with combustible components
Exterior walls that include combustible materials such as insulation in the assemblies are another green component. Builders typically use polyurethane or expanded or extruded polystyrene as insulation. Some examples of this type of exterior wall assemblies include structural integrated panels (SIP), insulated sandwich panels, aluminum composite panels (ACP), metal composite material (MCM), and exterior insulation and finish systems (EIFS).
Exterior wall assemblies are cost-effective and environmentally friendly but can also pose risks in a fire and contribute to rapid fire spread in several ways. Combustible external wall surfaces can facilitate fire spread.
Some combustible insulation cores included in the assemblies can melt and form a flammable liquid if the noncombustible outer layer is compromised when exposed to a fire. Fire can spread through internal air cavities of the external cladding systems and travel from level to level through window openings. Assemblies with foam plastic insulation can also generate toxic products when they burn and increase the fire hazard during construction.
Photovoltaic (PV) systems convert sunlight into electricity. The most common application is solar panels, which many green buildings use as a source of energy. Typically, the panels are built on the roof. Key components of PV systems include PV modules and array, a combiner box, DC and AC disconnects, an inverter (charger and controller), a utility service panel, and an optional battery. PV systems and solar panels are green because they use renewable solar energy as their fuel—avoiding other resources, such as oil, propane, or coal—and they don’t pollute the air.
However, once again, insurers must consider the risk factors involved. As with the previous two components, PV systems can create fire hazards and cause difficulties for firefighters. Solar panels can serve as an ignition source (especially if there’s a ground fault), increase exterior fire spread, and cause a dangerous thermal feedback. Firefighters must adjust operations to handle energized electrical equipment, limited access, and vertical ventilation. If used, batteries may have corrosive components or combustible metals that add to the danger.
PV systems can affect the roof’s structural load capacity during weather events, exacerbating the effects of wind, hail, wind uplift, and anchorage issues that cause damage to the property. Snow and ice can accumulate in shaded areas, adding to the structural burden. Solar panels can inhibit proper roof drainage, potentially causing water damage or harm to structural integrity.
Vegetative roofs use vegetation and related landscape elements to create an assembly of interacting components designed to waterproof and insulate a building’s top surface. They aid in storm-water control by reducing the overall volume of runoff, easing the demand on water drainage and treatment systems.
They help improve air quality by increasing the amount of plantings in an area to provide natural air treatment and reduce airborne contaminants. The roofs save energy by acting as a buffer between ambient temperature and roof insulation, reducing the fluctuation in high and low daily temperatures and rate of temperature change. That lessens the load on the building's mechanical heating and cooling systems. If maintained properly, they have an increased service life over conventional membranes because they’re protected from ultraviolet rays. If a vegetative roof is visible and accessible, it provides access to natural scenes, which can increase productivity and general health.
The risk factors for vegetative roofs start with increased fire potential because they can act as an ignition source to promote fire spread and hamper firefighting efforts. The roofs are susceptible to wind uplift and the production of wind-borne debris. They can contribute to structural collapse if drainage is insufficient when there’s an accumulation of water from manual firefighting efforts, rainwater, snow, or ice on the roof.
The higher the percentage of the roof covered in vegetation, the greater the risk. The basic design has to consider wind speed, roof slope, building height, and the buffer zone between vegetation and nonvegetation areas. If not, those factors will increase the risk. Vegetative roofs must be properly maintained to avoid higher risk.
Insuring green buildings
The green building trend is a positive one, but insurers need to consider the risks involved with covering these properties. Insurers should look to communities with strong and well-enforced building codes because such measures will help make sure that green buildings are constructed and maintained properly. Communities ranked well for their fire departments and community risk reduction efforts are also desirable. Insurers need detailed data and analytics on a commercial property’s characteristics, sprinkler systems, and more to underwrite green buildings properly.
Insurers can profit from the green building trend. They just need to understand the risks.
Kevin Kuntz is assistant vice president, Commercial Lines, Verisk Insurance Solutions, and can be reached at firstname.lastname@example.org. Xianxu (Sherri) Hu is a risk control engineer, Verisk Insurance Solutions, and can be contacted at email@example.com.