If you’re a property owner or operator, there’s a good chance you’ve recently watched your insurance premiums rise as insurers crack down on building materials that can promote the spread of fire.
As we saw with the headline-grabbing case of Aluminium Composite Panel (ACP) material, insurers are now making it very hard for owners to protect their assets if they contain highly-ignitable materials. And they’re not the only ones taking the heat – it looks likely that professional coverage exclusions will be imposed on consultants and contractors involved with these materials as well.
Building authorities and the wider industry are yet to come up with formal solutions. Meanwhile, there’s another big name coming to the forefront of the issue: Encapsulated Polystyrene (EPS) panel.
What is EPS?
EPS panel is a great insulator that has been a popular choice in building for decades. While assets in the last ten years have generally moved toward a fire retardant core (or at least the EPS-FR variant with integrated fire retardant), older facilities are highly likely to feature traditional-style EPS ceiling and wall panels.
The EPS hazard is twofold. Its core easily combusts and it allows fire to spread quickly and invisibly within the sandwich panel through walls and ceilings. Once a fire takes hold, the panels are at risk of delamination, spilling molten plastic which further transfers and propagates the fire.
Where EPS is present in facilities used for food and beverage, pharmaceutical and industrial production, operators can quickly lose control of overhead costs as their insurance premiums spike, especially where they require cover for consequential loss. I’ve heard of clients’ premiums doubling or more over a space of several years.
What solutions are available?
EPS is not something you can easily cut out to satisfy your insurer, since insulated panels are very closely integrated with your facility. The panels form hygienic, insulated enclosures, while lighting, services and equipment run through them. This means replacing walls and ceilings is disruptive as well as time-consuming.
Of course, the classic fire risk strategy is to install sprinklers to safely manage the risk, rather than remove it altogether. They may either extinguish a fire or contain it until emergency responders arrive. FM Global studies estimate that sprinklers can reduce property loss by a factor of 15. However, FM Global are very clear that this does not apply to EPS or similar combustible panels, since they can spread fire in a way that evades sprinklers. So you could spend a lot of money on a sprinkler system and still leave yourself open to insurance headaches – not to mention a fire that paralyses your business.
The bottom line is you’ll need to explore a number of areas and weigh up the impacts so you can make a good business decision. These include:
- Insurance review
Start by engaging with your broker and insurer to understand the specific drivers for premiums in your case. Seek advice – how much pressure would come off the premium if you did decide to substitute high risk materials, or install active fire safety systems?
If it sounds like building refurbishments could be worth your while to get out of the insurance bind, engage with an appropriate builder or contractor to look at the feasibility and cost of material replacements. Often there are no straightforward solutions here – but with an appropriate staging plan coordinated around shutdowns or out-of-hours works, this can be achieved.
It may not be palatable to the business, but moving to a new site or a greenfield build could make sense when weighed up against the two options above. Naturally, this is a longer-term view, but it is worth also considering the opportunities for other efficiencies that a new site could provide (e.g. energy consumption, production capacity) on top of resolving the fire risk.
Another thing to keep in mind with many older facilities and demanding production environments is the lifespan of the EPS panels. Towards the end of this lifespan, moisture and chemicals could contribute to corrosion along floor tracks, creating hygiene risks. We have also observed major risks where ceiling panels have absorbed water from leaks, causing bloating of core materials and sometimes even delamination due to bond failure. If personnel use the ceiling panels for access, the additional load of water and/or delamination will reduce the structural capacity of the ceiling. Understanding the risks and lifespan of materials should be considered as a part of any audit.
The certainty and continuity of appropriate insurance is crucial to any industrial producer. Insurance risks will not go away on their own, so to have proper control over your business, you need a clear picture of the status of your asset and options going forward. That might take a short-term expense – but it is critical to controlling cost and ensuring sustainability into the future.Browse more BADGE Blog posts