IIG News

Skyscrapers and their CAR/Liability exposure

An introduction to Skyscrapers and two in particular in South Africa, and my opinions in respect of the CAR/Liability exposure on High Rise buildings.

The construction of multi-storey buildings is one that poses unique challenges with regards to insurance cover of such contracts. Whilst the need to maximise usage of high value land is one reason for the construction of high rise, multi-storey skyscrapers in cities such as New York, London, Shanghai and Bangkok; the construction of Skyscrapers as they are nicknamed, is not something that is common in Africa.  The construction of skyscrapers around the world seems to have become a game of “ours is taller than yours”, with cities and architects vying for the title of tallest and most unusual. To be honest, a skyscraper is any inhabitable building that is over ten floors in height. Although there are many such buildings in existence in South Africa, truly large skyscrapers are not often constructed in South Africa. There are many reasons for this, one of them being that Johannesburg and its environs were built on land that has been honeycombed by over a century of gold mining. This has resulted in the potential for ground failure under heavy loads, such as would be exerted by a very tall building erected on a relatively small footprint. Currently the two tallest inhabitable buildings in South Africa are the Carlton Centre in the Johannesburg CBD at 223 meters high, and the Ponte City Apartment building in Hillbrow, Johannesburg at 173 meters high. Both of these buildings were built in the mid 1970’s and are icons of the JHB skyline. The Leonardo building located in Sandton Central, is due for completion in the second quarter of 2019, and will then become the tallest inhabitable building in South Africa, at 227 meters in height.

A few of the risks associated with the construction of high risk buildings, can be described as follows; damage to existing services and removal of lateral support to nearby buildings, as a result of deep excavations for the construction of foundations and underground parking basements; failure of the structure either during or after completion of work, resulting from poor design of the building, poor workmanship, unsuitable use of materials, and or poor quality of materials used. The need to control costs on any project is important, however, it should never be the overriding factor when it comes to any construction project, such as a skyscraper/ high rise building. Sound engineering and quality in every way must be the order of the day, and not simply an inconvenience associated with achieving a spectacular looking structure. The construction of high rise buildings around the world has also evolved in the use of radical materials, such as lightweight exterior façade panelling and framework. The need to optimise cost, aesthetics, and weight distribution in high rise buildings may result in highly combustible materials being used as part of the construction materials. The risk that these materials can and do pose to the safety and stability of skyscrapers, has been seen in the past few years, following a number of fires that spread very quickly in high rise buildings around the world. Countries such as China, Singapore and Dubai, to name a few, have been at the forefront of constructing some of the most unusually designed and tallest buildings in the past 20 years. The construction of skyscrapers in Dubai, for example, has resulted in the construction of the current tallest building in the world, the Burj Khalifa, at 828 meters. As Emerald Africa, we are given the opportunity to assess, risks such as these, and potentially participate in the Property Damage insurance covers for these structures.

The possibility and impact severity of falling debris from high rise construction sites is another concern for insurers. Strong wind velocity and wind direction dynamics also play a role, in increasing the risk of damage to the structure being built; and the potential for injury or death to workers, and other persons near the site. Fortunately, construction companies and their clients are very conscious of these risks, and safety and risk control and risk mitigation play a very large role in the planning and implementation of construction projects. The collapse of construction cranes, particularly tower cranes is another potential risk if they are not erected and used correctly. Such a collapse could result in serious damage to the structure itself, and also neighbouring premises. Again, these risks are considered when the initial planning and sourcing of equipment is done by the construction company and the architect.

Article by: Chris Potter, Portfolio Executive at Emerald Risk Transfer (Pty) Ltd.