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“These are not overstated risks and should not be ignored”

“These are not overstated risks and should not be ignored” | Insurance Business

“These are not overstated risks and should not be ignored”

“Fragmented and lacking in trust” is how the House of Lords science and technology committee perceives the construction sector in the UK, based on the evidence it has gathered, and wants such barriers addressed if the government is keen to advocate off-site manufacture (OSM)… but insurer Zurich has serious misgivings when it comes to the OSM push.  

“The current business models and the traditional model of financing and cash flow in the construction sector make it difficult to deliver the benefits of off-site manufacture for construction,” read the committee’s Off-site manufacture for construction: Building for change report. “For the government’s investment in off-site manufacture to be successful, the Construction Leadership Council must work to provide the sector with the resources and leadership to become better integrated.”

The committee said the construction sector must build trust and partnerships so that companies can work together in improving the uptake of OSM, which the report noted would be the only way to meet the government’s target of building 300,000 houses a year by 2020. Simply put, according to the report, traditional construction methods do not have the capacity to build enough homes.

“There are clear and tangible benefits from off-site manufacture for construction which make a compelling case for its widespread use,” said committee chair Lord Patel. “We heard evidence that OSM could increase productivity in the sector by up to 70%.”

Zurich, however, in its capacity as an insurer of housing associations and corporate property portfolios, has expressed its apprehensions. In fact, the insurance giant was mentioned in the report.

“While evidence from Zurich Insurance and the Concrete Centre warned about the dangers of some materials used in off-site construction being less resilient to fire, water, and physical damage, robust regulation and design considerations should be able to mitigate these risks,” read the nearly 60-page long document.

In Zurich’s view though, while it recognises the potential, a blind eye should not be turned to the increased risks – it is calling for full understanding of the associated perils as construction innovation is embraced. From the insurer’s perspective, to say that regulation and design considerations should be able to mitigate the risks is not good enough.

“The ever increasing and immediate demand for more new UK homes has understandably paved the way for the adoption of MMC (modern methods of construction),” commented Allison Whittington, head of housing at Zurich Municipal, following the release of the parliamentary report. “But issues relating to the durability of a finished development, including increased risk of larger scale damage from flood, water damage, and fire events has also emerged.

“These issues also represent an increased risk to the wellbeing and possible displacement of the occupants. Likewise, combustible and lightweight materials such as wood, polystyrene, and recycled materials have the potential to sustain a greater degree of damage than traditional materials, leading directly to an increase in repair costs and timescales – these are not overstated risks and should not be ignored.”

In addition, Whittington said they concur that the government and the construction sector must work towards further education and training in this regard. The Zurich executive also pointed to the importance of exploring the risks in greater detail to ensure that properties built using the new methods are safe and resilient.

“If adopted correctly MMC can provide a number of benefits; implemented incorrectly or with corners cut, puts people in real danger,” stressed Whittington. “We are clear that the potential benefits of innovation in construction can be far reaching – MMC isn’t to be feared, but the associated risks need to be fully understood.”

 

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