The boom in green construction in Australia is good news for the environment but could spell bad news if insurance policies are not updated to keep pace.
One in five of Australia’s CBD office buildings are currently Green Certified, which means water, energy and material costs are optimised for efficiency.
However, delegates at the ANZIIF-AICLA Claims Convention in Sydney earlier this week heard that the updated building practices are delivering higher values for landlords but can also create headaches for brokers and insurers.
Zurich’s National Risk Engineering Customer Relationship Manager Mervyn Rea told the convention the buildings presented five main issues for insurance managers.
The use of different construction materials meant fires would behave in different ways, which needed to be factored into the underwriting.
Similarly, many green buildings utilise architectural elements such as roof-top gardens, which bring with them the potential to retain large quantities of water, risking structural damage and water penetration.
The roof-tops of some green buildings also feature renewable energy sources, such as wind turbines or solar panels. Not only do these features present exposures to business interruption claims if power is lost, they also increase risks to firefighters and speedy fire fighting.
Business interruption issues also need to be factored in repair times, given that many green buildings use materials and technology that can take longer to source and install. Rea recommends these longer lead times be reflected in indemnity periods.
Finally, the added complexity of these buildings create additional professional indemnity exposures for designers and builders.
Zurich Global Corporate Claims Account Manager Steven Kopti says Zurich has responded to the challenges with new policies.
“Our Better Green coverage for Strata and Aged Care ISR policies are a case in point,” he says.
“Although each offering is slightly different the main benefits include air quality management, building commissioning expenses, debris recycling, professional services and recertification costs.”