Risk Management

Fire Hazards associated with building materials

Whenever we insure any type of Property Insurance risks, we will ask you what type of construction the building is. This includes walls, floors and type of roof. We will ask you when the building may have been built.

The reasons for this are obvious, Timber burns much easier than Brick (which tends to crack around the mortar if hot enough). Age is important because there are tougher building codes in more recent times making these more modern homes a more attractive risk. But also because older homes may have much older and more degraded electrical wiring and plumbing ready to cause damage in some way with much less of a trigger. Insurance Underwriters will naturally apply different premium rates to these risks.

Some choose not to cover any buildings older than 50 years old. Some will demand that the wiring and plumbing are inspected by an appropriate professional before considering the risk further.

EPS Panels

In more recent times, it has been a requirement to declare how much Sandwich Panel (Extended Poly Styrene) may also be in a building. This material is used in cold rooms and is called this because the foamy material used between two sheets of metal is extremely hazardous when it burns, and it burns very easily and creates a toxic gas that not even firefighters with breathing apparatus will go near. If you are in the food industry you will know this product well as it is also very hygienic and has great insulation properties important in maintaining cool temperatures. However, if you have more than 10% of floorspace taken up with this material, you must declare it to insurers.

Now there are further additional dangers with property risks.

Cladding materials

In the last ten years, the use of cladding materials has become widespread due both to the demand for high-rise buildings and to the product's multifaceted use for insulation, improved rigidity and cosmetic purposes. Many of our more recently refurbished high rise buildings have these panels fixed to the outside of the building giving it that fresh new look. Even some houses and blocks of flats are being freshened up with these panels. They look quite good!

Nothing wrong with this if using Australian standard compliant products that require these panels to have fire retardant qualities. However, in recent times, some types of cladding materials imported from China fail to comply with Australian standards and lack the fire-retardant qualities of compliant products. The China-Australia Free Trade Agreement (ChAFTA) could intensify this problem. The incentive has been to save on costs rather than focus on safety!

How do we know this is happening?

In November 2014 the Lacrosse Residential Apartment Building in Docklands, Melbourne caught fire, suffering extensive damage. The fire was started by a cigarette on an eighth floor balcony. The building's combustible external cladding enabled the fire to race up to the 21st floor.

It was subsequently found that the cladding material was imported from China and was not tested to Australian standards.


So what will happen now?

In a nutshell, building professionals, owners, managers and their insurers need to be aware of these risks

While the builder was happy to save money on cheaper imported materials, there is no saving to everyone else. As the defect in the materials is not readily apparent until, for example, a fire ignites, there may be limited or no chance to recover from the builders, developers and certifiers if they are long gone by the time such an event occurs. This can only increase the risk to insurers which ultimately is reflected in the premium. Alternatively is to audit the existing work but this also comes at a cost.

The consequences of using defective materials are potentially serious in terms of injury, fatality and rectification costs. Insurance Underwriters have to become be aware of those potential hazards when considering whether to accept a risk or not.

Currently Strata insurers accept in good faith that buildings have been constructed safely, but this may not always be the case. To manage this risk, insurers may consider requesting certified documents to show that the material being used is compliant. They may also require assessments of existing and newly constructed strata buildings to determine the extent of use of cladding or other materials which do not meet Australian standards.

Body corporates, strata managers and owner organisations could engage technical experts to undertake inspections of their buildings to determine whether the cladding and other materials used are appropriate and conform to relevant standards.

Regulatory and compliance professionals including builders, surveyors, technical assessors and building compliance officers also need to be aware of these risks. If they are accused of failing to do so, their professional indemnity insurers will soon know with an increase in claims and ultimately their own premiums..

In conclusion

Prevention is better than the cure, and if you are in the situation of being unsure about the materials used in your Building, then seek expert advice before it is too late. While Insurance may pay for a financial loss, there is still a cost attached to this involving the inconvenience and loss of time, but also increased premiums from claims when we should be driving these back the other way with good Risk Management.

Latest News

High Court dismisses Business Interruption Test Case

Today the High Court dismissed appeal by Insurers on the Business Interruption test case. Even the big insurers make silly mistakes! But you the policy holder may benefit if you were one of the 40% of Business Pack policy holders that added Business Interruption cover to their Business Pack. While it was never the intent of insurers to cover policyholders for the loss of income from a pandemic, the fact that insurers never factored in a risk premium for it, and the fact there is supposed to be a material or physical loss to trigger the Business Interruption section, none of that matters according to the highest Court in the land. So what was the mistake? Simply that when insurers defined what they considered to be the definition of an infectious disease, they referred to the Quarantine Act of 1908 which since was superseded by the Biodiversity Act of 2015. Because the Quarantine Act of 1908 no longer exists, apparently you cannot draw on this for a definition of an infectious disease? Not one of the insurers picked up on this! Shows how much interest we take on the business of Governments, except what is reported in the media.

read more

Three Years running - Insurance Brokerage of the Year 1 to 5 staff

Mandy and Robert Cooper were extremely honoured and astounded to once again win, Insurance Brokerage of the Year for 2020 from Insurance Business Australia magazine. This is the third year running.

While this year has not been the easiest of years for the business with Covid 19, the Recession, the hard market and issues at Lloyds of London, we are literally all in this together as an Insurance Industry.

CPR Insurance Services continues to make our clients the number one focus of our business while managing our relationships with Insurers, who we need more than ever in this market climate.

CPR Insurance Services are a highly ethical Brokerage with a reputation as a trusted advisor who always acts in the Client's best interests. Their experience, knowledge and expertise is amongst the highest in the industry.

CPR Insurance Services is now ten years old as a business and is proud of being an Authorised Representative of Ausure and their partnership with Steadfast, giving CPR the strength and backing to match it with any Broking firm in the Insurance Industry, but remain focussed on supporting the Small to Medium business segment.

Memberships of the National Insurance Brokers Association, Australia and New Zealand Institute of Insurance and Finance, Australian Insurance Law Association, Australian Professional Indemnity Group and the Australian Institute of Company Directors, ensures CPR Insurance Services maintains the high standard of knowledge and expertise required to be one of the best Brokerages in Australia.

CPR Insurance Services also plays a strong role in their local community supporting other Sporting Clubs and Community organisations. They also support and promote local businesses with their operation of the Kedron Brook Business Group who meet regularly and has 174 members.

We are truly honoured to receive this National award once again for the third year as a recognition of CPR Insurance Services contribution.

read more