Insurance & Food Factory Construction

Paul Collins

Contents

• Introduction to Mitsui Sumitomo at Lloyd’s (MSL)

• Our approach to Risk Engineering

• Historical context – why involve insurers?

• Building Regulations for new construction – Fire Safety

• Insurers’ requirements for new construction

• Summary

Non-Life Insurer Ranking in Global Market

Introduction - Growth of the Syndicate

Our approach to Risk Engineering

• One of the three core values of MSL:- Underwriting Claims Risk Engineering

• Use of professional risk engineering consultants

• Partnership approach with client and broker

• Practical and innovative solutions

• Account management philosophy

• Mutual benefit to MSL and client Reduces frequency and severity of claims

Introduction – Who we work with

Why involve insurers?

• Food industry as a sector has experienced considerable losses – insurers want to be involved

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2003 2004 2005 2006 2007 2008 2009 2010YTD

£ M

Common features of losses:-

• Extensive combustible construction

• No active fire protection

• Good management standards overall

• Prompt response from Fire Brigade

• Business Continuity Plans of little benefit

Why involve insurers?

• It demonstrates a commitment to managing risk

• Supports a partnership approach with insurers and brokers

• Insurers have a lot of technical expertise to feed into projects

• Insurers do not want to have to ask for retrospective improvement on a newly constructed building

• Involving your broker and insurers at an early stage will ensure no hidden cost further down the line

Building Regulations – Approved Document BFire Safety

• B1 Means of Warning & Escape

• B2 Internal fire spread (linings)

• B3 Internal fire spread (structure)

• B4 External fire spread

• B5 Access and facilities for the fire service

• Primarily concerned with life safety –

complements insurer recommendations

FPA Food Processing Factories 1: Design Principles

• Deals with design principles for passive fire safety

in food processing factories.

• Applicable to new builds and extensions

• Guidance if followed will help to minimise the extent of fire and smoke damage

• Not requirements, but a useful starting point for discussion with interested parties

• The principles applied should be building and

occupancy specific

The specification of the construction of the building will include the following considerations:

• The types of processes to be undertaken

• The nature of, and fire hazards represented by, the equipment and goods in the building, and in particular their likelihood to support fire development

• The fire load within the building

• The financial exposure.

FPA Food Processing Factories 1: Risk Assessment

FPA Food Processing Factories 1: Risk Assessment

New buildings & extensions:

• Hazards should be considered and understood

• Can the hazards be replaced, or re-engineered to minimise the risk?

• If not; will management controls be sufficient to reduce the risk to an acceptable level?

• Ultimately, specific recommendations on construction including compartmentation or active fire protection may be made

FPA Food Processing Factories 1: Risk Assessment

• Insurer recommendations for fire protection will be based on a number of factors:

– The severity of the hazards presented– The asset values of the facility– The business criticality of the site

• Food companies should consider– Reputational damage caused by a loss or interruption– Loyalty of customers in the event of an interruption to

production– Future access to insurance market at viable insurance rates

FPA Food Processing Factories 1: Construction

• LPCB/FM approved panels or non-combustible construction is normally a requirement

• Insurers may have a preference for non-plastic based insulation – mineral fibre, stone wool etc.

• All panels must be installed in line with their approvals – stitching, unsupported panel length, orientation etc.

• No polystyrene!!

FPA Food Processing Factories 1: Construction

• Detailing of service penetrations needs careful consideration

• Flue and service penetrations through panels need to be carefully detailed

• Fire stopping of services and detailing of fire walls, shutters will need

FPA Food Processing Factories 1: Fire separation

• High hazard processes may need separation– Fryers– Ovens– Thermal oil systems– Specific guidance provided in design guide

• Plant rooms – electrical, ammonia refrigeration, vacuum pumps

• Between storage and manufacturing

FPA Food Processing Factories 1: Fire Protection

• Consider sprinkler protection– Up to 70% premium discount for fully compliant systems– Minimises down time following a fire as uses less water than

brigade– Reliable, proven track record of fire control– Provides further flexibility in the design

• Automatic fire detection – Full coverage L1/P1 to BS 5839 Pt 1 desirable

• Specific hazards may warrant localised fire protection– Fryers– Ovens– Thermal oil boilers– Critical plant rooms– Dryers

Other considerations

• Services– Lighting – suitably specified, IP rating….

– Power – location of transformers…

– Redundancy of supplies generally

• DSEAR– Hazardous zoning

– Rating of electrics

– Explosion suppression/venting

– Undertaking the operational risk assessment

Other considerations

• External Areas− Where will pallets and plastic trays be stored− Proximity of other plant and equipment – silos, oil storage

• Cold weather precautions− Vulnerability of equipment to freezing− Roof void temperatures− Fire pump houses− Non heated areas

When it goes wrong

Managing Change – Thermal Oil Installation

New thermal oil installation Serious design flaws No professional project

management No insurer involvement Poor housekeeping &

maintenance No method statements. Enclosure deficiencies. Expansion pipe routed internally Combustible panels not

adequately cut away No retention to the thermal oil

enclosure

Summary

• Food production facilities provide some complex risk engineering challenges

• Due to large losses in the sector associated with legacy issues, new builds come under scrutiny

• Early engagement with brokers and insurers is essential for new builds and extensions

• Not all elements of the design will meet insurers’ initial recommendations – compromises need to be discussed

• Construction materials still key issues for insurers

Summary

• Higher fire risks must be compartmented or have fire protection systems (or both)

• Investment in incorporating insurer recommendations at the design and construction phase will ensure businesses obtain the most competitive insurance terms in the future

Thank you - Questions?