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The risk profile of modern methods of construction

A Marsh Specialty collaboration with the Department of Engineering within the University of Cambridge

Crane and building construction site against blue sky

Construction companies increasingly are looking to modern methods of construction (MMC) to reduce their environmental impact while improving projects’ efficiencies and costs. Although the term “modern methods of construction” has different meanings in different sectors and jurisdictions, it generally covers a range of offsite manufacturing and onsite techniques, such as modular construction and the use of cross-laminated timber.

As with any new technology, there is limited loss data for MMC, making it more difficult for insurers to understand trends and quantify potential risks. Clients subsequently are finding it challenging to insure projects incorporating these innovative processes or products, which in turn poses a significant challenge for MMC adoption.

To help accelerate the acceptance of MMC, Marsh Specialty collaborated with the Centre for Sustainable Development, Department of Engineering (University of Cambridge) to better understand the risk factors relating to modern methods of construction, and how to overcome the often cautious approach to underwriting MMC projects.

The study determined that greater collaboration between stakeholders will result in a better grasp of the processes, products, risks, and mitigations related to MMC. To enhance best practices and risk perception, the MPhil in Engineering for Sustainable Development project team proposed a standardized and consistent risk framework to remove ambiguity and variability.

In the absence of years of loss data, this should help improve insurers’ comfort in underwriting a range of MMC risks, and help drive positive change in the built environment.

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