regards

n° 5
February 2003

C Christian LEROY Objective

responsibility
for French employers
Insulated sandwich p.3

panels and fire risk

I Didier Schütz, Risk Control Practice Leader
dschutz@scor.com

Risk involving large insulated sandwich panels constitute a big

challenge from a fire prevention / protection standpoint. As the
frequency and severity of losses has been increasing, several
countries have been conducting studies on this subject.
A typical “sandwich panel” has metal skin containing a core of either
non-combustible mineral wool, foamed polystyrene, polyurethane or Private LTC insurance:
polyisocyanurate. Polyurethane filled sandwich panels offer a very
economical solution for achieving reliable temperature control and
international
providing coated, hygienic surfaces that can be washed down comparisons
frequently. Consequently, this type of construction recently has seen
p.5
an important and rapid development in many countries, for food
processing plants, pharmaceutical plants, laboratories,
semiconductors factories, electronic plants, aircraft / automotive
engine testing rooms, ageing rooms, space launch vehicle
industries, etc.
C Musée de la Poste

However, fire will spread very rapidly in buildings containing

combustible-cored sandwich panels because of their heavy
combustible load. In such conditions, if the fire is not controlled in its
early stages by automatic fire protection equipment, it will be quite
impossible to fight it manually due to the heat and toxic corrosive
smoke released. Consequently, after a fire, a large property damage
and a long business interruption period can be expected.
News in brief
The fire exposure of combustible-insulated sandwich panels
p.6
depends on the quality of the foam, the quality of manufacture
(adherence between the sheeting and insulation), and moreover the
quality of on site assembling. Yet, unless adequately arranged,
properly protected by automatic system and or provided with
approved passive protection, no insulated sandwich panel will
withstand a large fire.
...
 ... continued
Insulated sandwich
panels and fire risk
Increasing frequency and severity
In buildings that use combustible-insulated sandwich
panels, both the frequency and severity of losses
have increased in the recent years, principally in
warehouses and at food industry sites.
This increase can be explained by:
concentration of values and investments at one
site, compared to two or three previously;
industrial flows optimization: one plant is
dedicated to a single production line, with just-
in-time inventory systems;
automatization, resulting in a decreasing number
of staff;
Sandwich panels
constitute severe use of new technologies, i.e. new processes,
challenges for materials and products;
automatic sprinklers
systems an occasional contradiction between fire
prevention and product quality.
Insulated sandwich panels as systems
Insulated sandwich panels must be considered as
systems, not as components. Some criteria must be
evaluated to analyze the combustibility of such
panels:
type of wall facings;
type of insulation-filling material;
components other than insulation material (vapour
barrier, glue, inner and outer coatings).
Foam plastic insulation, such as polyurethane,
polyisocyanurate and polystyrene, is made from a
mixture of plastic components and a blowing
(foaming) agent. When involved in a fire, these
materials may spread fire damage far beyond normal
expectations. They may also generate large quantities
of dense, toxic smoke that may contaminate
machinery, equipment, products or the building, thus
requiring extensive cleaning, repackaging, or even
scrapping of a product.
This is the reason why plastics manufacturers
recommend that “exposed urethane insulation must
be protected from accidental ignition by completely
covering it with a flame barrier (thermal barrier) as
soon as possible after installation”.
Sandwich panels containing plastic foam present
severe challenges for automatic sprinkler systems.
Polystyrene is 1,5 times more combustible than
polyurethane, forming a combustible liquid when it
melts. Automatic sprinklers may not confine the fire,
2 regards n ° 5 February 2003
so that protection should be considered at either roof
level, false ceiling level, or in racks, and should protect
building walls and building structures. In some cases,
retrofitting or additional sprinklers should be installed,
depending on the geometry of the room.
Nevertheless, automatic sprinkler protection alone
must not be considered as a substitute for a thermal
barrier.
Alternative non-combustible insulation ?
Research are made regarding non-combustible
sandwich panels insulated with rock wool. But rock
wool panels are currently deemed as:
impossible to develop in freezers for technical
reasons: density and weight are too high for
insulation capacity requirements;
difficult to consider in the food industry because
food products might be contaminated by mineral
fibres;
non-economical: the cost of mineral wool
insulated panels is approximately 2 to 3 times the
cost of plastic foam insulated panels.
Loss Prevention Practices
Good loss prevention practices obviously are crucial.
The integrity of the sandwich panels should be
ensured as follows:
there is no exposed combustible foam;
panel walls are covered with metal;
each panel is adequately joined to another one
and adequately attached to building floors and
roofs at the lower and upper ends;
there are no non-combustible components other
than insulation material (vapour barrier, glue, inner
and outer coatings).
Special precautions also should be taken when
installing electrical devices and equipment, and when
conducting cutting & welding operations,
representing potential ignition sources. Sufficient
spacing and separation should be ensured between
the refrigeration system and the rest of the facilities,
especially when an ammonia refrigeration system is
used.
SCOR has recently led a detailed survey on insulated
sandwich panels specificities and our engineer teams
remain at your disposal for any further information you
may need regarding risk analysis, loss prevention,
MFL assessment, and all other technical references.
...
 ... continued
Insulated sandwich
panels and fire risk

Some catastrophic fires involving combustible insulated sandwich panels

Date, location Occupancy Fire origin, path, damage

1992, France Cheese factory Short circuit on lighting fixture. Fire destroyed more than
10,000m2 in one hour. Fire fighters extinguished the fire in
2.5 hours. Plant is 100% destroyed.
1994, France Cheese factory Overheating of equipment during night in this ISO 9000 newly
built modern plant. Fire destroyed more than 13,000m2. Fire
fighters extinguished the fire in 6 hours. Plant is 75% destroyed.
1994, France Fishery Fire on a truck. Fire destroyed more than 6,700m2 in 35 minutes.
Fire fighters extinguished the fire in more than 1 hour. Plant is
100% destroyed.
1995, France Slaughterhouse Fire on packaging storage. Fire destroyed more than 7,500m2 in
about 1 hour. Fire fighters extinguished the fire in 4.5 hours.
Plant is 75% destroyed.
1996, Belgium Slaughterhouse Fire in cold room. Fire spread and destroyed more than 5,000m2
in about 1 hour. Fire fighters, passing near the plant at the time
of the loss, extinguished the fire in 3 hours. The 52,000m2
plant is 10% destroyed.
1996, France Refrigerated Fire during night. Fire destroyed more than 5,000m2 and
warehouse 27 refrigerated trucks parked outside in about 1 hour. The plant
is 100% destroyed
1997, UK Plastic Fire during idle period. Fire destroyed more than 1,225m2. Fire
wrapping fighters controlled the fire in about 3 hours. Warehouse is 100%
rolls warehouse destroyed. PD= about € 914,000.
1999, Cyprus Cheese factory Fire during idle period; most likely fire is due to hot work. Fire
destroyed more than 9,100m2 in about 1 hour. Fire fighters
extinguished the fire in about 6 hours. Plant is 70% destroyed.
PD/BI= € 17.3 Mio.

Objective responsibility
for French employers
I Jean-Marc Sarafian, Legal and Claims Unit Manager
jsarafian@scor.com

Whereas a number of rulings had previously
concluded "gross negligence chargeable to the
employer" in French asbestos-related court cases,
the Supreme Court of Appeal recently pronounced a
series of decisions on matters of principle that
extend beyond pure asbestos to all occupational
disease and injury. Employers are now deemed to
have a so-called obligation "of results" regarding the
overall safety of their employees.
On 28 February 2002, a series of rulings by the social
division of the French Supreme Court of Appeal
radically transformed the notion of employers' liability:
"(…) given that by virtue of the employment contract
linking the employer to his employee, the former has
an obligation of safety of results, notably with regard
to occupational disease contracted by the employee
due to products manufactured or used by the
company; that the failure to meet this obligation
amounts to gross negligence, according to article
L. 452-1 of the French code of social security, when
the employer was, or should have been, aware of the
danger to which his employee was exposed, and
neglected to take the necessary protective measures.
(…)".
In so doing, the Supreme Court of Appeal aims to
extend the mode of compensation for victims by
ruling not just on asbestos in the workplace, but also
on all occupational disease.
...

3 regards n ° 5 February 2003

 ... continued
Objective responsibility
for French employers

Indeed, in France, as elsewhere, there is a specific

Social Security scheme for compensating occupa-
tional disease or injury. Although this system grants
higher compensation for occupational disease or
injury than the benefits paid by other Social Security
schemes for non-occupational disease or injury, the
employee must waive of any right of recovery against
the employer based on common law.
Only in the case of "gross negligence" can the
employer be subjected to financial sanction. This
sanction comprises two distinct parts:

an increase in the employer's contribution to his

insurance scheme,

compensation for the psychological damage
suffered by the victim(s).
In order to constitute gross negligence, such
negligence must be of "exceptional gravity, deriving
from a wilful act or omission with regard to the
employer's duty to be aware of any dangers and in
the absence of any justificatory cause".
The Supreme Court of Appeal's decision, which has
since been followed by others and extended to
occupational injury, has led to profound deliberation
within the French Federation of Insurance Companies
(FFSA). The consequences of the ruling on known or
potential claims for past events have been analysed,
as well as how to protect against employers' gross
negligence in the future.
Up to now, gross negligence was covered by General
Third Party Liability insurance, but it was unclear as to
how the cover would be implemented. A study of the
legal status of the employer in the event of gross
negligence, conducted by the FFSA during 2002,
The employer concluded that employers did not need liability cover
needs a protection so much as protection against the financial
against the financial consequences of a gross negligence ruling.
consequences of a
gross negligence Under the French system of gross negligence, the
ruling employer is not "liable" in the traditional sense; it is
only exposed to financial sanction, resulting in
increased contributions to the social welfare body that
bears the cost of the additional compensation
awarded to the victims. The employee, or his/her
beneficiaries, has no right of appeal against the
employer.
The FFSA has therefore set up a general scheme for
covering gross negligence, that no longer falls under
liability but under direct "financial loss" cover (branch
16 k of the French insurance code), and offers
insurers a "frame of reference", comprising:
preliminary remarks on the risk, the particularities
of claims management, the need to establish a
professional risks prevention policy, and moni-
toring specific risks;
an explanation of what the contract does and
does not cover, conditions for the cover to apply,
and the requirements of the insured, notably
concerning information and declarations to be
provided to the insurer;
details regarding annual limits of cover;
a description of the claims management process,
from declaration through to settlement, chargea-
ble to the limits of cover.
Recommendations for drafting the "gross negligence"
exclusion clause in the new or renewed General Third
Party Liability policies complete this frame of
reference.
In addition to these recommendations, the FFSA has
set up a statistical monitoring scheme to observe the
forecast increase in claims following the ruling of 28
February 2002. This takes the form of a quarterly
questionnaire on occupational injury and disease,
including compensation paid; number of cases;
number of victims; assessment of new cases; and the
number and assessment of the stock of cases in
progress.
This close and active technical collaboration between
insurers and reinsurers makes it possible to protect
against the risk of gross negligence, in the context of
the French market, which is both advanced and
complex. The solution proposed by the FFSA is
particularly innovative and meets the needs of
insurers and employers alike.

4 regards n ° 5 February 2003

 Private LTC insurance:
international comparisons
I Lucie Taleyson, Head of R&D Center Long Term Care Insurance
ltaleyson@scor.com
The majority of developed countries with aging
populations are confronted with the problem of an
increasing number of dependent, elderly individuals.
In the majority of countries concerned, as state
insurance is confronted with financing problems, it
cannot alone cover all the costs, which has opened
up the way to private insurance.
This article provides readers with an overview, an
initial evaluation of the main private individual LTC
insurance markets. For further information about these
different markets, Regards invites you to read our 9th
Life technical Newsletter.
The two main markets: France and the United
States of America
These two leading markets, in terms of volume and
experience, anticipated the enormous potential of LTC
products.
The French market provides fixed indemnity cover in
the form of monthly annuity payments. Once the
policyholder is recognised as being eligible, he
receives an annuity for life which is fixed when the
policy is underwritten. Three generations of fixed
indemnity LTC insurance products have emerged one
after another over the past 15 years. The latest
generation of products offers cover which increases
according to the degree of impairment, covering both
total and partial loss of autonomy. This cover provides
a wide variety of services and assistance for the
disabled individual and his family.
After a 20%-25% increase in recent years, the number
of policyholders should exceed 2 million by the end of
2002, in other words an increase of over 30% this
year.
A close examination The American market evolved on the basis of
of the various LTC reimbursement models. The first generation of
markets prompts products appeared in 1975, but the market did not
us to make the start developing until 1985. Depending on the type of
following remark: cover, benefits granted serve the purpose of
the simpler the reimbursing expenses incurred for care and services,
product the easier provided at home or in a nursing home. These
it is to sell. reimbursements have daily or monthly limits. The
different types of extended coverage concern
expenses incurred by family and friends, those
incurred for home modification and nursing home
expenses.
More than 6 million individuals have underwritten a
long term care policy. The growth in sales in recent
years has been significant, with figures often ranging
between 15%-20%, but this trend started to tail off in
2001. Furthermore, the current penetration rate of this
product is considered to be less than 7% of the
population concerned. Sales could be promoted by
simplifying products which consumers feel are too
complex.
Two models are currently on offer on markets
worldwide: the indemnity model and
reimbursement model
In many other countries LTC cover is likely to develop
considerably: apart from the Japanese market, where
long term care has already made great strides, there
5 regards n ° 5 February 2003
are burgeoning markets in the European Union, Asia
and Canada.
Most markets have opted for indemnity LTC products,
based on the model adopted in France. As a result,
the US is the only market to have developed
reimbursement LTC products on such a large scale.
The indemnity model is more straightforward and
more flexible for the insured than the reimbursement
model: for insurers it is a better guarantee for success.
The indemnity model provides a better response to
the basic needs of the disabled individual and his
family. It is more flexible because the insured is free to
use benefits for example to pay for informal care
provided by the family. It is also easier for the insured
to understand because the amount of the annuity
benefit is determined when the policy is underwritten.
And to be eligible for total LTC cover, the only
condition for payment of this annuity is severe
permanent loss of autonomy which is precisely when
a disabled individual is in financial need.
For insurers, there is a higher risk of costs escalating
with the reimbursement model than the indemnity
model. It is true to say that with the indemnity model it
is the insured who determines how the money is
spent: eligibility for benefits is based on the fact that
the individual is recognised as suffering from loss of
autonomy. But LTC indemnity products often cover
permanent loss of autonomy which is more severe
than that covered by the reimbursement model: it is
therefore easier to verify the degree of impairment.
In the United States partial loss of autonomy is
covered: in this way many cases of temporary loss of
autonomy benefit from this cover.
In France, the LTC indemnity model has developed in
the form of cover for total and permanent loss of
autonomy; coverage for partial loss of autonomy,
designed more recently, where individuals are more
likely to regain autonomy should give rise to stricter
claims control. To limit the risk of escalating costs, a
simple solution is to cover only total loss of autonomy.
Furthermore, the risk of costs escalating with the
indemnity model, which is characterised by the
payment of a fixed monthly cash benefit stipulated in
the contract, is less significant than that of the
reimbursement model. On the US market, some
insurers have in fact underestimated their liabilities,
...
 ... continued
Private LTC insurance:
international comparisons
notably due to inflationary medical costs: reimbur-
sement limits have been reached more often than
expected. Lastly, administrative costs and expenses
incurred managing a reimbursement claims model
are very high compared with those of an indemnity
model.
To conclude, a close examination of the various LTC
markets prompts us to make the following remark: the
simpler the product the easier it is to sell. As a result,
the majority of countries have opted for the indemnity
model covering total permanent loss of autonomy to
launch their LTC cover.
News in brief
I Dominique Dionnet
ddionnet@scor.com
Natural and industrial risks: response by the
French government
On 3 January 2003, the French minister for Ecology
and Sustainable Development presented a draft bill
on the prevention of technological and natural risks
and compensation for damage.
The first part of this bill, drawn up, notably,
following the accident at the AZF plant in Toulouse,
focuses on technological risks. It mostly deals with
the management of hazardous "Seveso" classified
plants, of which there are 670 in France. With
regard to compensation, the state of "technological
catastrophe" has been provided for in order to
compensate victims within a maximum period of
three months. A chapter relating to insurance has
also been incorporated in this bill.
The question of natural risks, and more particularly
the problem of flood prevention, is covered by the
second section of the bill. It empowers local
authorities to intervene and enforce easements
with a view to flood prevention and natural
redirecting of watercourses, so as to fight against
floods upstream of urbanized areas. Another
measure envisages making more information
available to buyers or lessees concerning potential
flood hazards to housing.
New medical liability in France
Health professionals in France now have a new
system under which medical risks are covered by
law No. 2002-1577, dated 30 December 2002,
concerning medical liability.
Editor: Editing commitee:
Véronique Pornin Dominique Dionnet
Stephane Gin
Paul Idelson
Béatrice Julienne
Odile Lasternas-Brécy
Etienne Leroy
François Mallot
Jean-Marc Sarafian
6 regards n ° 5 Febuary 2003
SCOR: over 15 years’ experience in LTC
insurance
The CIRDAD, its International Centre for Research and
Development on Long Term Care Insurance, studies
the risks inherent to LTC insurance and provides the
tools required to manage long term liabilities. To
complete its knowledge of the risk and anticipate
trends, the CIRDAD forms partnerships with
recognised research specialists on aging and loss of
autonomy. Stronger from its experience, SCOR is able
to provide assistance to customers throughout the
various stages of product design, and in the
monitoring and managing of their risks.
The three main provisions of this law are:
a move towards a compensation system on a
claims made basis, by which "insurance cover
must exist at the time when the claim is made";
a restriction in the duration of cover (period
covered by the contract or five years following
the time when the injury occurred);
a better balance of the financial cost of
compensation linked to nosocomial infections.
Insurers will henceforth cover up to 25% of the
invalidity rate; beyond this, compensation will
be covered by the French national office of
compensation for medical accidents.
Mixed results for the introduction of the 4th
European Directive on motor insurance
To date, eight European countries have not yet
taken the necessary steps to align their national
legislation with the 4th Directive: France, Greece,
Ireland, Italy, Luxembourg, the Netherlands,
Portugal and the United Kingdom. This text, which
envisages cover for accidents outside the victim's
country of residence, was due to come into force in
all member states by 20 July 2002.
SCOR publications
Fo c u s : " C a s e m a n a g e m e n t : a g l o b a l
approach to victims". For further information,
email: publications@scor.com
I, avenue du Général de Gaulle
Lys impression - 91860
92074 Paris-La-Défense cedex
France
www.scor.com
N°ISSN : 1632-1057