Risks with insulated panels continue to be difficult to place in a tight insurance market. Miramar Property Technical Underwriters Jonathan Grace and Darren Feng explain the technical details and risk management requirements for insulated panels.

What exactly is insulated panelling and where is it used?

An insulated panel is a pre-formed aluminium or steel sheet panel with a core made of expanded foam like polystyrene or polyurethane, which may contain varying degrees of fire retardant material depending on the product.

Jonathan says that while insulated panels are commonly referred to in the insurance industry as EPS (short for expanded polystyrene), that acronym isn’t accurate as EPS describes only one type of insulated panelling.

“Insulated panelling is a more accurate description of the panels, as we are aware of circumstances where people think that they don't have insulated panelling in their premises, because it goes by a different brand name,” Jonathan says.

Insulated panels are usually found in temperature-controlled environments such as the commercial food industry, or where clean rooms are required like pharmaceutical and cosmetics industries.

Why do insulated panels pose a heightened risk to underwriters?

Jonathan says that one problem with insulated panels is that they are highly combustible. “The difference between insulated panels and a brick or concrete wall is that it's easier for a fire to spread within a building that contains insulated panels,” he adds.

Darren explains that it’s not just the heightened risk of fire that concerns underwriters, but also the increased potential for an insulated panel fire to lead to a total loss. “Fire brigades can’t do much because the smoke is extremely toxic, and the panels deteriorate quickly. When insulated panels have been used in structural walls, fire brigades are less likely to fight the fire but will contain the fire to that premises as best they can,” he says.

What role can risk management play in reducing the risks of insulated panels?

Risk management is essential to ensure the outer layer of the insulated panel remains undamaged so that the core isn’t exposed, which can happen if the panels are drilled into or knocked by heavy equipment such as forklifts operating nearby.

“Business operators need to implement a good risk management program that includes visual inspections to ensure that if there is any penetration of the insulated panels, they are addressed,” Jonathan says.

Hot works or electrical work performed near insulated panels should be done by a tradesperson familiar with the risks, Darren adds. General maintenance is also important in any facility containing insulated panels.

Darren says that when considering a risk, underwriters require comprehensive photos of the premises, internally and externally, to appreciate the overall condition of the property.

Risk surveys, which provide underwriters with a more comprehensive view of the business and its quality of risk management, are preferable. “It might be a cost to the client but if having that survey available reduces the risk and may lead to a reduction in their premium.”

Brokers need to show that risk recommendations (that result from a risk survey) are addressed, or that there is a plan in place to do so.

“If you can show that the client is engaged with the risk, that will usually be a positive sign that underwriters will appreciate,” Jonathan says.

What is the current state of the insurance market when it comes to insulated panel risks?

Jonathan says capacity in the market for insulated panel risk has “reduced in the past few years” with restrictions imposed by many insurers.

Darren says that in order to maintain a minimum standard of risk management, Miramar has a set of conditions which apply to the insured property containing insulated panels. “Brokers are welcome to reach out to us and ask for a copy of those conditions, if they want them,” he says. “It gives the insured and the client an idea of our expectations relating to implementing a program and staying on top of risk management.”

Contact us for more information

For more information about insulated panel risks, the team at Miramar can help. Contact details for our experienced insurance professionals can be found on our website. 

Miramar Underwriting Agency Pty Ltd (‘Miramar’) acts as agent for the Insurer(s) of the products, certain underwriters at Lloyd’s and HDI Global Specialty SE – Australia. The Insurer(s) may act individually or as co-insurers. Please review the particular product which sets out the Insurer(s).