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Food and drink manufacturers operating out of premises

Composite Panels Cause Insurance Headaches for Food Sector

Jan 2020

Food and drink manufacturers operating out of premises that use composite panels to help create the required ambient temperature, may face issues at insurance policy renewal.

Insurers are continuing to react to the shockwaves caused by the Grenfell Tower tragedy[1] and are and are asking additional questions about the highly combustible nature of some composite panels, also known as sandwich panels.

The panels have an insulated core sandwiched between two metal or plastic facings and that core can either be combustible or non-combustible according to the materials used. Often, the core used in panels in older premises is combustible, but materials such as polyurethane and expanded polystyrene can also be found in newer buildings.

Such panels are typically found in warehouses, cold storage facilities, food preparation and manufacturing plants and even in hotels. The panels can help control temperatures but also lower energy bills, muffle sound and provide a hygienic, easy to wash down environment.

If set alight, however, these panels quickly feed a fire, spreading flames and creating liquid fires with melting cores that produce corrosive, toxic and thick black smoke and are hard to extinguish.[2]

Whilst over the past decade this issue has not been in the spotlight, Grenfell has pushed cladding to the fore and into the minds of reinsurers, who are looking to ensure insurers know exactly what type of risk they are insuring and the materials used within buildings’ structures,[3] and attitudes to underwriting risks have since hardened.

Some insurers will no longer insure businesses with composite panels, whilst others may only insure those with panels that have non-combustible cores. Some are reducing or withdrawing certain policy benefits in response to the perceived risk and it is becoming more common to see both premiums and insurance policy excesses rising significantly.[4] In a food sector known for low margins, such insurance cost increases can be a blow.

To tackle these issues, food and drink businesses working with an insurance broker, should start planning strategies at least three months ahead of their renewal and managing their risk in a competent manner. This may mean replacing panels, installing sprinklers, or monitoring the risk remotely, as well as on-site, through intelligent heat and smoke detectors.

It is widely recommended that robust risk procedures should be written into health and safety documentation and assessments. This may include regular inspection of panels, as any damage can increase the fire risk. Other measures may also be required.

It may sound daunting, but an experienced risk manager in a local insurance brokerage can assist you and help you to appeal more to those insurers still in the market. They will also attempt to control your premiums and help you to continue to access cover. To find such valuable assistance, please use our ‘Find a Local Broker tool’.