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Read the latest news from UMAL – including coverage of our most recent conference

Read the latest news from UMAL – including coverage of our most recent conference

Rebate announcement and new terrorism extensions crown conference

New Chief Executive Paul Cusition (below) used UMAL’s Spring Conference to announce a new rebate of 10% for Full Members, with no change to rates. This follows last year’s unique anniversary rebate of 15%; the mutual has returned £30m to its Members since 1992.

“I am really excited by the opportunity with UMAL that I have inherited from Susan Wilkinson,” he told the capacity meeting at BMA House, London on 24 April. Looking ahead, he said “I am keen that we also give back much more in the way of information, data and knowledge, given our unique insight into the sector”.

Also announced at the event were enhanced Business Interruption (BI) terms on UMAL’s Terrorism cover, which will be introduced from 1 August at no extra cost. The Non Damage BI extension limit is to be increased from £250,000 to £2.5 million and to £1m for Nuclear, Chemical, Biological and Radiological Contamination.

This cover will also have a 45 day maximum indemnity period (compared to the 7 days offered by other providers), and include a 2 mile radius from the incident against a typical 100 or 250 metres.

Other improvements include an increase limit of £1,500,000, from £250,000, on the Loss of Attraction Extension, and the introduction of a Brand Rehabilitation Extension to cover public relations consultancy and advertising costs, with a limit of £1.5m.

Terrorism: Non-physical damage

The changing nature of terrorism in recent incidents, and the need to reflect that, lies behind changes being discussed by others in the market that UMAL have already largely implemented. This was the central theme of Russell Wheeler’s presentation at UMAL’s Spring Conference.

Offered as a cover since 1993, there are currently over 100 Members with terrorism cover. “Our definition of terrorism is wider than Pool Re and most of our competitors and already includes Non Damage BI Cover. Whereas conventionally, insurance was focused on property damage from events like the 1993 Bishopsgate bombing, attacks like the one at Borough Market show that there is a developing need for Non Property Damage cover providing, for example, alternative facilities if access is denied and covering against loss of revenue or Loss of Attraction,” he stated. “We believe that the peak exposure centres on student accommodation, where an attack results in a building being closed by the Emergency services and forensic investigations, potentially with further closures resulting from trauma of residents, which could be long-term.”

Russell Wheeler, UMAL Property Underwriter

Reducing risk – the latest advice

As part of UMAL’s service to each of its Members, Mike Stones conducts a full on-site survey every two years. Depending on the institution, this can last for one to seven days. His subsequent reports, covering property, and health and safety, provide the Member with detailed ‘to do’ lists to reduce risk, improve security and comply with the latest regulations.

“I can also make special visits for new builds, or to cover specific issues such as waste management, fire suppression or marquees.” says Mike. “If you are bringing in new processes, you might want to ask for a visit – for example introducing silane gas, which explodes on contact with the air.”

A valuable element in the reports is benchmarking. Institutions are scored against 21 property criteria ranging from fire detection and extinguishing to testing and training. Health and Safety scoring covers 10, including risk assessments and Safe Systems of Work.

Mike’s extensive knowledge and advice is backed up by the technical library on the UMAL website, with all the latest documents and standards. It helps, in keeping it up to date in this frequently-changing field, that Mike sits on the relevant committees of the Fire Protection Agency and Building Research Establishment with specialists from other major insurers. He also maintains his own reference files, such as details of over 3,000 safes.

Disruption and prosecution

“An incident obviously brings a lot of disruption – not just loss of income and amenity, but also of reputation,” states Mike Stones. “Senior managers are now being investigated and prosecuted much more as individuals, as juniors are not deemed to have control over decisions.” Fines are assessed against the harm caused, and culpability. Definitive sentencing guidelines on Corporate Manslaughter are due to be published in September 2018 and will come into force in December 2018.

Mike Stones UMAL Technical Risk Manager

Top nine to check

These are Mike Stones top nine recent regulations that he recommends checking:
  • FM200 gas fire suppression is used in many server rooms, and now must be checked four times a year (Fluorinated Greenhouse Gas Regulations 2015)
  • Gases under pressure (including those in fire suppression systems) and corrosive substances are now included in the Dangerous Substances and Explosive Atmospheres Regulations 2015.
  • Are your procedures on eye safety for kilns and lasers based on the old AUPRO rules? The Control of Artificial Optical Radiation Regulations 2010 are the latest standard.
  • The new Control of Electromagnetic Fields at Work Regulations 2016 cover a very wide range of risks, including to pregnant workers (even from hairdryers, clocks and PCs), those with medical devices and the danger of unintended detonation of flammable materials.
  • Hot water temperature risk assessments have to balance the risks of legionella against possible scalding (HSG274:2014).
  • PAT testing must include leased equipment such as vending machines (INDG236 [rev3]: 2013).
  • Do you use combined heat and smoke detectors? Check their spacing – it is closer than for single sensor systems (BS5839-1:2017).
  • The new 18th Edition of the IET Wiring regulations (coming in June) will require arc fault detection to help prevent electrical fires.
  • In a granite area? The exposure limits to natural radon gas have been reduced (Ionising Radiation Regulations 2017)

Sprinkler Mythbusting

There are some myths and confusion around sprinklers and water mist that he is keen to clarify. “Wherever sprinklers have been made compulsory, deaths have been reduced. Worldwide there have only ever been 50 deaths in sprinklered buildings, but just in the
UK two people die in buildings without sprinklers every day.

“It is a myth that sprinklers are expensive. In fact, they are around 1 – 2% of construction costs, about the same as carpeting. They do not cause extensive water damage; at 60-80 litres per minute, they pump 1-4% of a fire hose. And whatever you see in the movies, they don’t all go off together but are limited to the area where the fire is detected.

“Halls of residence are allowed ‘domestic’ systems which can be easily retrofitted with plastic pipes and 6-9m3 tanks, while other campus buildings need larger commercial systems.” Addressing concerns over sprinklers being set off accidentally or maliciously, Mike pointed out that they can be set up to require a ‘double-lock’ or manual trigger.

Water Mist

Water mist systems do not extinguish fires directly like sprinklers, but work by cooling the flames and reducing the available oxygen. “They come with many technical issues,” he believes “and while they can be appropriate for special areas such as deep fat fryers and certain machinery, they are not designed for general use. We have a handy questionnaire for installers in the online technical library.”

“You can’t talk about fire without mentioning Grenfell Tower,” he adds. “The Hackett enquiry’s interim report stated that ‘the current Regulatory system for ensuring fire safety in high rise and complex buildings is not fit for purpose’, but RIBA fear that the regulations may not change very much. We are continuing to monitor the situation.”

Flooding Inside and Out

Surface water flooding is a growing issue. Mike believes that building regulations are out of date which, with the loss of permeable surfaces to tarmac and concrete and the unpredictability of heavy rainfall, is compounding the problem.

Indoors, changes in pipe systems, with compression and push-fit joints, are partly behind a big growth in internal flooding. “UMAL has had four large claims in 2018 already,” he reports, “Pipes always seem to fail in the worst places – over expensive equipment or high up in a building!”

Major Fines in 2018

Southern Health NHS Trust £2m
Two preventable deaths

Royal Mail £1.6m
Traffic accident in yard with no traffic markings

BAM £965k
Painter falling through roof

Safestyle UK £850k
Window cleaner falling off a ladder

Glazing £850kBroken knee
Swissport Aviation £502kTwo baggage handlers falling

McDonalds £200k
Inexperienced person hit by angry motorist during traffic control

What claims tell us

Reviewing trends in claims handled by UMAL over the years, Dominic Thomas stated that there have been over 23,000 claims in the 25 years of the mutual’s existence, of which 1,500 were in the 2016/17 financial year. There has been a lot of change in that time, not least because of a substantial growth in Member numbers.

“Property represents 10% of the number of claims but getting on for two-thirds by value – and this is increasing,” he pointed out. “While most claims are for theft or accidental damage, it is not surprising that the big ones are dominated by fire and flood. As Members invest in larger and more expensively equipped facilities, so their value grows, as do the potential losses.”

Even with growing Membership, employers’ and public liability (EL/PL) claims are static in number and falling by value. Mainly trips and falls, they do include some ‘long tail’ situations such as back injuries, stress and RSI. Dominic attributes the fall to the Jackson reforms and the introduction of the ‘Portal’, which fixed legal costs for most while not affecting the value of damages.

Professional indemnity (PI) claims are few in number but tend to be complex and expensive. While many revolve around ‘failure to educate’, discrimination and breach of confidentiality claims also feature.

PI claims are becoming an increasing feature as students become more demanding in their expectations. And while there may be claims for compensation relating to recent staff strikes, situations vary considerably from Member to Member, and so on this UMAL is providing advice on a one-to-one basis rather than issuing any ‘broad-brush’ advice.

“Travel used to be a relatively small proportion of our claims but now represents 75% of all claims” says Dominic. “This is down to a big increase in the number of overseas placements, as Members add value to their courses.” The value of claims has risen too, especially in medical, where costs have seen a steady 10% annual inflation. Nevertheless travel claims remain on average quite low – one in ten are for lost or stolen mobile phones, for example.

New Systems

Dominic Thomas reported that major improvements are in hand on claims reporting and monitoring through the My UMAL portal on the UMAL website.
Members will be able to see a graphic display of their loss history, with breakdowns by type, frequency and severity, and will be able to benchmark themselves regionally and nationally. The facility will also provide trend analysis and information on common claims, and Members will be able to see detailed feedback on any large losses.

This data should prove helpful as a feedback into the institution’s risk management.

Claims by number 2007 - 2017

Claims by value 2007 - 2017

Categories of Travel Claim