Insurance for Combustible Facade Cladding and the Dangers of Non-Compliance
Combustible cladding and other similar building materials have become worldwide headlines, perhaps most infamously in the devastating tragedy of the Grenfell Tower fire in London, and locally, the Lacrosse high-rise building fire in Docklands, Melbourne. At the Melbourne fire it was found that combustible and inappropriate cladding played a pivotal role in the rapid spread of the fire, according to the Melbourne VCAT hearings [T1].
As a result, the combustibility of such building materials has caused many in the construction industry and property owners, to question the appropriateness and ubiquity of such materials, especially their use in the construction of high-rise projects.
Many state governments, as well as most property insurers around Australia, have already begun to react to the industry-wide spotlight on the prevalence of combustible cladding in the construction and fitting out of many high-rise buildings.
In Australia, around 10,000 buildings are suspected of containing flammable [T2] cladding – and there are several different types of cladding which can have many different applications, with some highly combustible, while others pose little risk.
What is Cladding (EPS or Otherwise)?
Combustible cladding is made from two metal outer facings or skin bonded together by a core, which is usually made from a highly insulating material. It is generally used by builders and architects because it’s an inexpensive, quick and efficient material to enhance the overall appearance of the building, and improve energy efficiency.
The Victorian State government announced a ban on dangerous flammable cladding in early 2018, with planning minister Richard Wynne stating that[T3]; “There’s nothing more important than ensuring we have community safety”. In addition to a state-wide ban, additional penalties include fines upwards of $400,000, and in extreme cases of non-compliance, imprisonment.
The Australian Federal Government via a Senate Economics Committee has reported in December 2018 extensively on Non-Conforming building products and the need for a coherent and robust regulatory regime. This included reports on an aluminium composite cladding and a separate report regarding the protection of Australians from the danger of Asbestos. The committee concluded with 13 major recommendations which have been submitted to the federal government for consideration and legislation including regulatory and industry bodies for immediate implementation.
More recently, a probing senate enquiry into the pervasiveness of non-conforming building materials was undertaken- notably, materials including polyethylene cladding or EPS cladding, to be banned from installation in new construction [T4].
How to find out if your workplace or home has combustible cladding?
There are several suggested tips for finding out whether your workplace or company building contains inappropriate or non-conforming types of cladding. These include:
- contact immediately the construction or building company responsible for the original planning and construction of the relevant building;
- allow the building manager to consult cross-sectional drawings of the cladding and insulation systems, any existing cavities and fixing members;
- research any relevant accreditations associated with the building, including fire test results, and determinations by code officers, and crosscheck with Australian Building Compliance standards checklist as well as stipulations in the National Building Code of Australia;
- contact the Fire Engineering Dept. of the CSIRO (Commonwealth Scientific and Industrial Research Organisation) as the department is equipped with state of the art x-ray and TGA testing methods to determine if your building contains any combustible cladding.
Risk Identification & Insurance
Property insurers have invested in the expertise necessary to measure residual risk. Using this, the industry has considered the challenges posed by non-compliant ACPs (Aluminium Composite Panels) and other materials (including most forms of Cladding), beginning with the most fundamental of issues: its identification.
The ICA (Insurance Council of Australia) [T5] insurers have agreed upon a Residual Hazard Identification Protocol (see lower) for the identification of residual risk presented by the use of this building material.
Critically, the evaluation of exposure for each building that has combustible facades needs to be conducted on a case-by-case basis by competent fire protection professionals, including fire safety engineers, to evaluate the most critical exposures, threats to life and code compliance.
Building owners should also consider working closely with their broker and insurers to ensure that the identification and evaluation process adopted for the building, including those engaged to undertake the process, will be considered sufficient for ongoing underwriting of the building.
Cladding Protection & Identification Protocol
The purpose of this protocol is to provide a consistent across varying industries, in circumstances where ACP type or other combustible façade materials are considered to be present, for assessment and reporting of the residual risk, suitable for both building owners and insurers.
This protocol should be referenced by all stakeholders involved in assessing building risk posed by ACPs or other combustible façade materials. Adopting this protocol will produce reports that are consistent across all jurisdictions and will be meaningful to building owners as well as their insurers.
The approach includes both the identification of the material used and the installation methodology - the whole wall assembly. This will enable assessment of the risks posed by the use of the materials, which may then trigger consideration of remedial actions to lower a building’s residual risk to acceptable levels.
Step-by-step Hazard Identification
Reports commissioned by a building’s owner should address 10 critical questions through the following steps: (Information provided by Insurance Council of Australia)
The identification of ACPs or other combustible façade materials is the critical first step in the process of identifying the potential hazard to life and property. It must be undertaken with high confidence in the results and a clear understanding of the uncertainty.
The primary purpose is to accurately classify and quantify the materials present including the insulation and sarking, in order to determine the fire load along with its location and proximity to ignition sources.
Representative, appropriate and documented sampling and site observations to assist a Certified/Accredited Fire Engineer’s Risk Assessment is required at this stage in order to make the identification process as transparent as is stipulated by new Government legislation.
ACPs (Aluminium Composite Panelling)
Insurers have observed that ACPs typically come in four general categories defined by the composition of their core materials ranging from A – High fire risk, through to D – non-combustible are outlined in the following infographic:
(Please note that mentions of Polymer or Polymer-based materials include all types of flammable polymers)
In cases where there is no documentation associated with the building’s construction, or where available documentation lacks the necessary information to positively identify the ACPs that have been installed; or where there is sufficient doubt that the ACPs installed is not what is documented, it is necessary for samples of the ACP, along with sarking and insulation materials behind any ACP, to be subjected to testing to clearly identify the composition and combustibility of core material and the insulation/sarking behind the panel.
Importantly, visual examination of the ACP or small flame application to a sample, in these circumstances, is insufficient on their own for identification purposes.
Other Combustible Materials include
Apart from ACPs, other façade materials of concern include:
a. Rendered Expanded Polystyrene (EPS)
Where this material is identified on Class A or B buildings, its presence shall be reported.
Identification is typically visual once a sample is taken.
b. Insulated Metal Panels
Where this material is identified on the facades of Class A and B buildings, the metal facing and core
material needs to be identified as follows:
- The facing would typically be steel or aluminium but could also be plywood, fibreglass or plastic.
- The core material would typically be – Expanded polystyrene, phenolic-coated expanded polystyrene beads (XFLAM or Polyphen), polyurethane or polyisocyanurate.
For the above materials, accurate identification of all components is required. This protocol does not provide risk ranking for all the material types.
Accountable Reporting & Analysis
Cladding composition reports should be on official laboratory letterheads/reports and must clearly indicate sampling, submission, analysis, discussion and conclusions as well as positions of the signatories of the report.
A Commissioned report by the building owner using the protocols outlined above should answer the following questions:
- Who has carried out inspections, sampling and testing for the building owner; location of the sampling and tests carried out on the cladding and insulation material; company name, relevant competencies, qualifications and experience of testing laboratories used to test the samples?
- What category(s) of ACPs or other combustible façade materials are present on the building and location of each type?
- Amount of combustible material present and square footage covered
- What substrate or insulation is present behind the ACP(s)?
- What potential ignition sources exist for the ACP(s) given the configuration of the building?
The purpose of this step is to provide a consistent report into the building’s level of exposure to combustible materials.
This output is dependent upon the category of the ACP or identification of other combustible façade material determined in Step 1 and should make findings with regard to four questions:
6. What exposures exist to the safety of the occupants based on Step 1 outcomes?
7. Is the building compliant, with regard to ACPs or other façade materials, with the National Construction
Code and associated Australian Standards?
8. What are the exposures to the property and consequential business interruption risk of a fire involving the
ACP or other façade material?
9. What exposures exist to the reputation, image and market value of the building as a result of the ACP or
other façade material identified?
Making findings for each of the questions is necessarily complex. Each building with ACPs or other combustible materials present will vary in terms of quantification, insulation materials, ignition scenarios, fire protection and suppression systems, as well as occupation type.
From 1930 until its banning in the early ’70s, Asbestos was widely used in residential as well as many commercial and industrial building projects. Asbestos Liability Insurance is compulsory to those who deal with asbestos – either directly or indirectly [T6].
Despite high asbestos-related payouts and compensation claims both locally and abroad, asbestos is still excluded from a majority of insurer’s policies. Those removing and dealing with asbestos on a regular basis understand the requirements of having this cover included, but what about those who inadvertently come into contact with asbestos?
Coverage You Can Depend On
Depending on the circumstances of the property in question, and given the satisfactory completion of all combustible material identification protocols, you and/or your business should consider a comprehensive commercial property insurance package.
Our role is to help identify the most pressing risks that are present in your building and determine the safest ways in which to manage it. EBM has years of experience in this area, working with many corporations to ensure they are covered with a tailored insurance package that suits the unique set of circumstances.
The EBM Process
Wherever insurance cover is needed, we should develop clear and comprehensive policies for our clients before negotiating the best possible conditions and premiums from experienced brokers.
Using the combustible cladding risk identification protocols outlined above, we expertly assess your risks, going through every necessary detail with a fine-tooth comb.
EBM takes a flexible approach, first examining a variety of policies from a range of insurance providers to determine if any existing policies will meet your requirements, if not- we set about customising a policy to suit your needs.
Speak to our specialist team about your risks and how to mitigate them.
[T1] Garnered from https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Non-conforming45th/Interim_report_cladding
[T2] Garnered from https://www.macrobusiness.com.au/2019/01/10000-buildings-suspected-flammable-cladding/
[T3] Garnered from http://www.richardwynne.com.au/media-releases/banning-combustible-cladding-in-victoria/
[T4] Federal government senate enquiry https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Non-conforming45th/Report)