The rising insurance cost of timber frame construction in the UK continues to add cost pressures to the construction sector. Nonetheless timber is set to be a key contributor towards the UK achieving its target of becoming net zero by 2050.

Background

Substantial losses suffered by timber frame insurers in North America and Europe have resulted in global insurance capacity limits - or even outright timber frame underwriting bans at a corporate level. This has substantially reduced the supply of timber frame insurance capacity in the UK market, at a time when conversely, demand for timber frame insurance has significantly increased. 

Consequently, not only have premium rates increased, but a greater number of insurers are now required to share each development’s risk. 

Latest market appetite

Capacity is less easy to come by for timber frame projects, where it often takes several carriers to complete even the smallest of projects. Nonetheless, it is a sector that will need to be embraced by construction underwriters. 

In the closing months of 2023, more insurers are understood to be engaged in timber appetite conversations ahead of their 2024 business plans. As the number of timber frame developments in the UK increase, we may start to see a slow increase in timber frame capacity in 2024, but expect this to be gradual and cautious. Any new timber frame capacity being deployed is likely to start with existing clients.

Reaction

In response to rising costs, many developers increasingly challenge their historical ‘blanket approach’ to risk and insurance, and instead now seek a dedicated timber frame risk strategy that delivers a cost-effective and robust risk transfer solution.

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