Don’t Get Burned by Water

You will have heard the phrase, “Water is the New Fire” numerous times over the last few years, as it relates to high-rise condominiums. It is something that should be on the radar of all developers and contractors in the construction industry – especially those whose operations extend to high-rise developments. The market for condominium construction is not slowing down either. In 2020 alone, we are expecting to see the beginning of 216 condo projects totaling CAD $40 billion across Canada¹.

There are various sources of water damage that exist within condominium construction, however the main concerns to many developers, contractors, and insurers are: inundation, intrusion, and escape. According to AXA XL builder’s risk loss data from 2011 – 2019, water damage caused by water escape (from interior sources) represented 40% of the losses from a severity standpoint². Compounding on the severity, these losses tend to happen within the last few months of the project during the completion of higher floor levels when lower floors are mostly completed. The insurance marketplace has continued to respond to water loss experience with increasing rates, higher water damage-specific deductibles, and further underwriting of subcontractors involved in water source installation.

Ensuring mitigation or prevention measures are undertaken when it comes to the hiring of trades or supervision of works involving water is always the best course of action for developers and contractors to take. There are a number of different sources to build out a QA/QC plan when it comes to water damage (such as the AXA XL Water Works Checklist here) or third party solutions for equipment and  monitoring services, which  help mitigate and prevent water escape during the construction and operation phase  (for example, Eddy Solutions or WINT).

The introductions of these solutions are having a positive impact, not only from a loss prevention and mitigation standpoint during construction but also from an ability to obtain risk transfer products at competitive pricing and coverage. 

¹ © GlobalData Plc 2020 | Registered Office: John Carpenter House, John Carpenter Street, London, EC4Y 0AN, UK | Registered in England No. 03925319

² AXA XL IRMI Presentation 2019

The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. References to any services, provider or equipment does not constitute an endorsement by Marsh Canada or Marsh & McLennan. Marsh & McLennan Companies do not endorse, recommend, or make representations with respect to any water monitoring services, equipment or service provider.