News

1 Dec 2015

Risk Management & Expanded Polystyrene Panels

Over the last 15 years, significant losses have occurred associated with large fires where sandwich panels (EPS) have been a feature. Whilst many are related to businesses within the food manufacturing sector, a high profile fire in the Lacrosse Apartments in La Trobe Street, Docklands was found to have been fuelled by the use of external polystyrene cladding which caused more than $2 million in damages.

Over the last 15 years, significant losses have occurred associated with large fires where sandwich panels (EPS) have been a feature. Whilst many are related to businesses within the food manufacturing sector, a high profile fire in the Lacrosse Apartments in La Trobe Street, Docklands was found to have been fuelled by the use of external polystyrene cladding which caused more than $2 million in damages.

The fire began from a cigarette on a balcony of the eighth floor of the Lacrosse Apartments on November 25 2014, and spread quickly to the top of the building. All building residents were successfully evacuated, and the MFB acknowledged that the building’s sprinklers, smoke detection and early emergency warning systems operated well within their designed capability.

Expanded polystyrene is flammable. Polystyrene is classified as a “B3” product which means it is highly flammable or “Easily Ignited.” Although it is an efficient insulator at low temperatures, its use is prohibited in any exposed installations in building construction unless the material used is flame-retardant.

Normally in an exposed construction, EPS is concealed behind drywall, sheet metal or concrete. The sheet metal can be either aluminium or metal. The cladding used in the Lacrosse Apartment building has been found to be imported from China and does not meet Australian standards.

In the past two years, there has been two multimillion dollar fires in Australia involving this type of material, The Lacrosse Apartments mentioned above and a food manufacturing fire in Queensland.

This has made the insurance industry cautious around risks where EPS is present. The result is effectively a shrinkage in capacity with some insurers pulling out of the market altogether. Those willing to insure EPS risk do so under strict underwriting guidelines and risk control measures.

Sandwich panels do not start a fire on their own, and when EPS gets implicated in a fire spread, it has generally started in a high risk area such as a cooking facility and spreads as a result of poor fire risk management, prevention and containment measures. As such, prevention of ignition and containment of early fire spread are critical. In reference to EPS, we note as follows:

  • EPS panel ceilings are very susceptible to fires starting beneath them;
  • Fires under EPS panel ceilings spread very rapidly, the fire spreads across the ceiling as the panels progressively delaminate and the EPS melts and vaporises to fuel;
  • Fires can also spread inside wall and ceiling panels, before bursting out at the panel seams.
  • The fire load from EPS wall and ceiling panels is enough on its own to cause deformation and collapse of major steel roof beams;
  • Fire brigades are unlikely to contain a developed EPS panel fire as they will not enter the building due to the risk of collapse.

When considering risk acceptance and pricing, a major factor considered by insurers is a recognition that the business is proactive in minimising their own risks and not solely relying on an insurance company if anything goes wrong. Whilst this is pertinent for EPS risks, it’s also relevant for all industrial businesses. Every operator should have a carefully created risk management plan for the building and businesses associated operations.

Sound Risk Management plans for industrial risks should include:

  • hot work controls;
  • cold work’ controls for work carried out on insulation;
  • electrical installation and maintenance programmes including thermographic imaging;
  • dedicated fork lift charging areas;
  • management of cooking equipment;
  • housekeeping practices including not storing combustibles against the outside of the building;
  • regular building inspections and prompt repair of damaged insulation panels;
  • when cutting holes in EPS panels for services ensuring the exposed EPS is ‘sheathed’ or a collar is fitted;
  • plant maintenance, and where ammonia is used, providing gas detection;
  • site and premises security;
  • general awareness amongst staff and management of the potential problems, and how to action risk improvement.

Your McKenzie Ross broker is always available to provide insurance and risk management advice. We have an uncomplicated commitment to drive efficiencies, consistently achieve benchmarks and create value for our clients. If your risk management plan or insurance program needs reviewing, why not give us a call?

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