Have you noticed insurance premiums in the food production industry rising over the last few years? Well, Gallagher may have found the culprit: expanded polystyrene (EPS).
Used extensively in the food production industry, EPS is seen as a good way to insulate food and beverages. However, a Gallagher report found that older EPS panels are highly combustible, making placement of property risk the industry’s biggest insurance issue.
“While EPS may be the best insulation for food and beverage producers, it is also the reason insurance premiums are being driven up in the property sector,” said Stephen Elms, national head of food production at Gallagher, in the company’s latest market overview report.
EPS panels have been blamed for a pair of high profile fires at Sunpork in Brisbane in 2016 and Thomas Foods International in South Australia in 2018. Smaller incidents in Victoria have compounded the problem, and now reinsurers and Lloyd’s of London have taken a harder line with property risk in the food production industry.
“Older EPS panels are highly combustible if exposed to an ignition source, and high-profile fire incidents in the last 18 months have created a scenario of reduced capacity and severe premium increases being levied by the global insurance market,” said Elms.
“The first action point was the immediate increase in insurable rates being charged for any business that has EPS contained within their buildings. These premiums have risen steeply and quickly and will continue to do so for the foreseeable future.”
Elms suggested that food and beverage producers examine their fire prevention strategies to mitigate risks. “Food producers must strive to improve their internal risk management processes,” he said.
“These internal processes need to be documented so that they can be communicated and shown to insurers to confirm that businesses are doing their utmost to ensure that these exposures are being mitigated as strongly as possible.”