Why the insurance industry is split on regulation changes

Why the insurance industry is split on regulation changes | Insurance Business

Why the insurance industry is split on regulation changes

Despite offering strong support to the Technical Standards and Safety Authority (TSSA), Claims Relationship Manager at RSA Canada, Ryan Jones, is concerned by proposed changes to the Boilers and Pressure Vessels Regulation in Ontario for two main reasons.

The current regulation requires the periodic inspection of piping and fittings “at such intervals as are set out in the code adoption document.” However, the code adoption document (CAD) does not set out any intervals. As a result, there is a lack of clarity regarding the requirement for periodic inspection of piping and fittings. To address the lack of clarity regarding periodic inspections of piping and fitting, the TSSA and MGCS have proposed the inspection requirements be eliminating from the regulation, but the panel did not reach consensus on this issue. As a result, two options were recommended to the TSSA and MGCS:

  • Option A: Replace the current general requirement for the periodic inspection of piping and fittings with a clause that provides TSSA with the authority to take actions required to ensure the safety of piping and fittings. For example, TSSA would have the authority to require the periodic inspection of certain piping and fittings if there was a safety rationale for doing so.  In the longer term, TSSA should work with a standards development organization (SDO) to conduct analysis and develop national standards for high-risk piping and fittings. This would include a definition of what constitutes “high-risk” and requirements for periodic inspection, if they are deemed necessary. If the SDO develops requirements and definitions, TSSA should implement them in Ontario’s code adoption document as mandatory requirements and, if necessary, revise the regulation.
  • Option B: Leave the existing general requirement for the periodic inspection of piping and fittings in place until TSSA, working with an SDO, develops a definition of “high-risk” piping and fittings. At that point, defer to SDO guidance on periodic inspection of piping and fittings that are not high-risk, while maintaining the current regulatory requirement for periodic inspection of piping and fittings that are high-risk.

Jones believes the existing general requirement for the periodic inspections should be left in place until the TSSA develops a clear definition of “high-risk” piping and fittings. Jones feels it would be more beneficial to public safety to establish standards to address the increased life safety risk associated with the operation of ‘high-energy-piping’. “We further submit that it would require a formal ‘regulatory change’ (similar to this one), in order to re-establish the inspection requirements which could take years to operationalize,” Jones says.

Although Jones supports many of the administrative changes that were added after the ‘round table’ process, he does not support the following proposed changes: 

  • Buried piping:  Increase in deregulation

“The current regulation allows buried water piping that operates at a temperature of 150°F (65°C) or less at a maximum allowable working pressure of 600 psi (4,120 kpa).  Although an absolute pressure has not been provided as a part of this proposal, it is believed to be in excess of 1000 psi.  A failure of any piping system, with that amount of potential energy, does cause an increase risk to life safety.”

  • Secondary Insurers:  Insurers who are retained by other insurers to perform inspections

The historical addition of insurers being authorized to perform boiler and pressure vessel inspections was founded on our experience and expertise in risk management supported by our contractual interest in the safe operation of insured objects,” Jones says.  RSA prides ourselves on maintaining an industry leading boiler and machinery department of experienced underwriting, claims, engineers and inspectors.  We are dedicated to our clients and utilize the expertise we have acquired over more than 300 years.  I am personally challenged to support how this model has a positive impact on public safety.  

  • Third Party Inspection Agencies:  A non-insurers who are retained by insurers to perform inspections

By maintaining a market leading equipment breakdown team, RSA supports the MGCS and TSSA in maintaining the highest level of public safety through our strong training programs and proactive approach to identifying and mitigating risk.  “By utilizing third party inspection agencies, I believe that there is potential risk of boiler and pressure vessel inspections becoming commodity based which may ultimately have a negative impact on public safety,” Jones says.

Jones went on to say he was pleased to see the advancements that the MGCS and TSSA had been able to make during this process, “not only is their working relationship better, they are clearly interested in hearing what we have to say,” he says.  “Unfortunately, not all opportunities for improvement are included in this proposal, but there are certainly some valiant efforts in continuing our strong track record in Ontario.”

To share your opinion on the matter, visit Ontario’s Regulatory Registry.

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