Food Sector Facing Composite Panel-related Insurance Shocks
Composite panels are widely used in food and drink manufacturing to ensure ambient temperatures are maintained.
The Grenfell Tower tragedy has made insurers wary of insuring anything vaguely similar to the combustible cladding used on the tower. This has led to insurers asking further questions when risks include composite panels.
Such panels are composed of two metal or plastic facings, sandwiching an insulated core. Depending on which materials are used for the core, the panels can be either combustible or non-combustible. Sometimes this is down to age, with older premises having risky combustible cores within their panels, but it is hard to generalise. Newer buildings can also have a fire risk, in the form of polyurethane and expanded polystyrene cores within composite panels.
This should ring some alarm bells for types of business within which such panels are typically found. These include warehouses, cold storage facilities, food preparation and manufacturing plants and even hotels. Panels of this nature gained popularity, not just because they control temperatures, but because they are also easy to wash down, can muffle sound and also help lower energy consumption.
If panels like these catch fire, flames quickly spread and create dangerous liquid fires. Fires like these, based on melting cores, generate dense black smoke that is both corrosive and toxic. They also make life difficult for fire crews with fires that are hard to extinguish.
Insurers prefer to offer policies to food businesses using panels containing glass fibre or mineral wool cores, which are non-combustible in nature.
Although this issue has long-existed – for more than 10 years in fact – Grenfell brought combustible materials into the limelight and insurers are having to react, being under pressure from reinsurers, who want the A-Z low-down on materials used within structures.
In 2018 natural disasters cost the world $225 billion and more losses cannot be contemplated by some insurers, hence the hardening attitude towards some risks.
Some who use composite panels in their food and drink business, have already found insurance is not available from their previous insurers. Other insurers are restricting the scope of the policies offered and introducing both higher policy excesses and higher premiums, to protect themselves from financial losses. Many businesses in the sector already have slight margins and cannot absorb the insurance premium hikes.
Useful advice is for businesses in this situation to work with an insurance broker, well ahead of their renewal date (by some 3-4 months, if possible), so that a risk-containing strategy can be put into place. Panel replacement may need to occur and fire suppression devices, like sprinklers, may need to be fitted. Other requirements may be intelligent heat and smoke detectors. Health and safety policies need to record strong fire risk containment actions, and also regular panel inspections, to check for damage that could result in a fire.
A local insurance brokerage, with a dedicated health and safety adviser, should be able to contribute to strategies and pitch your business to an insurer, in the best possible light. If you need help finding such a brokerage, please get in touch.