Whisper it quietly but there might be one or two differences between the English and the Scottish. From the way the two countries voted on Brexit, to the inevitable calls for another independence referendum, there are plenty of contrasts between the way the inhabitants of the two countries think and feel no matter how ‘British’ we all may be. But it’s not just about the people – Scotland’s landscapes, its climate and, for the interest of the insurance sector, its risks, are unique too.
Rarely is this better reflected than in the heritage building sector with Scotland renowned for its wealth of impressive and historic structures that are themselves unique and difficult to account for from an insurance perspective. Couple this with Scotland’s litany of threats and you have a risk management conundrum unlike any other.
“Heritage properties have unique risks in comparison to modern properties as most heritage buildings pre-date any form of building regulations,” said Ecclesiastical’s heritage director Faith Kitchen (pictured) speaking to Insurance Business ahead of today’s BIBA Scotland event. “Much of the infrastructure in place did not exist when heritage buildings were originally constructed and the retrofitting of modern amenities including water supplies, gas, electricity and passenger lifts in heritage buildings therefore creates new risks to actively manage. For example, vertical and horizontal voids can assist rapid fire spread.
“Heritage buildings can also be susceptible to extreme weather events and major fires, so regular maintenance and inspections are crucial. In Scotland, prevention and risk management is particularly important as many buildings are located in remote areas and so are further away from emergency services, such as the fire brigade. This means that these properties may experience slower response times from the emergency services in the event of a fire, for example, putting the fabric of the building and its contents at greater risk.”
To make matters all the more complex, many of the Grade I and Grade II buildings in the country are places of worship – which again, presents a host of unique risks ranging from the spires of churches which are particularly vulnerable to lightning strikes, through to the use of candles, so important around Christmas in particular, which carry the threat of major fires and serious injuries when not used correctly. All of this makes a risk assessment procedure vital.
“The traditional defence for most churches [to lightning] has been a lightning conductor – a single Franklin rod leading from the top of the spire or tower, to an earth stake buried in the ground,” explained Kitchen. “A modern approach to lightning protection is known as a Faraday Cage system, comprising a mesh of conductors laid at intervals over the roof and down the walls of the church, and connected to the ground by earth electrodes.
“Some places of worship are also in remote areas and may only have services once a week and therefore can pose security issues, as well as maintenance issues. For example, a water leak may not be detected until the issue has become much larger. Where appropriate, we recommend that churches are kept open because of the positive effect that it can have on security. Encouraging local people to pop into the church while passing by and creating a secure storage area in which all valuables can be locked can help reduce these risks.”
Of course when risks are so complex, the role of the broker becomes ever more important – they have a chance to add value to their proposition if they can address their clients’ major concerns which are likely to revolve around the threat of a major fire that could wipe out the irreplaceable.
“While all the usual precautions are necessary, such as electrical wiring inspections, fire suppression in commercial kitchens and alarms,” said Kitchen. “salvage plans and snatch lists are also required – enabling owners to grab their most valuable assets in the event of a catastrophe.
“Having the right sum insured is also critical and business continuity needs careful consideration. What will the client do if they are unable to open, can they move location? This is often more difficult for heritage customers. Setting the right business interruption indemnity period is critical for this sector as alternative premises may not always be an option and, for listed buildings, Historic Environment Scotland (HES) and local planning authorities will all be involved and this can be a lengthy and time consuming process.”
Kitchen also emphasises the risk of underinsuring heritage buildings and the need for specialist valuations.
“In the past we have had to reopen a quarry to source the correct stone to repair a property or employ specialist restoration experts to work on some of the more intricate features,” she said. “So you can see how not having the correct sum insured could really impact on the ability to reinstate the property back to its former glory.”
Still, establishing your business as a specialist in this area has huge advantages – and, as such, brokers may wish to develop a specialism to differentiate themselves in a competitive marketplace.
“It’s certainly one tactic that could be used and if you have the right in-house expertise to focus on one area this can be a very effective way of gaining a reputation for being that ‘go-to broker’,” said Kitchen. “To have a sustainable position in the market, brokers need a clear proposition about what they are and what they stand for.”