Talking to Risk Engineers
Discussing Steel Reuse at the CIREG Quarterly
On the back of Circular Steel 2022, I managed to secure an invitation to attend the CIREG quarterly meeting in March. It was held at RSA’s 22BG office and there were probably 15 people in the room and another 15+ on screen - all Risk Engineers for a variety of UK insurance providers.
What is a Risk Engineer you ask? Well these are the people that the insurance Underwriters turn to when it comes to technical details. So they are important people to be speaking with when it comes to steel reuse, and material reuse generally. Thanks to Trevor Chainey and Mark Allan for helping arrange this, and to Ade Adeyemo who chairs CIREG and led the session.
Joining me at the meeting was Michael Sansom (BCSA) and Kai Liebetanz (UKGBC). Michael is a fountain of knowledge in this space and has assisted in the creation of reuse specifications. Kai has been working in the Circular Economy Forum at UKGBC so was keen to hear about the views of insurers and pass this on to the forum members.
Background
I started the session by giving some background and context - principally that steel reuse is being specified or requested in some shape or form on most private large London projects (and this is where change starts, like a ripple effect). I explained that new business models are emerging and that companies involved in the space are all experiencing need for new tools, software and integrations. I then ‘teed up’ the conversation by offering a few steel reuse and insurance myths… insurers don’t like steel reuse, you can’t get insurance, it’s risky, it’s more expensive.
Michael gave an excellent presentation outlining some of the challenges this part of the industry faces, along with a few thoughts on where the solutions lie. As a contributor (in his previous role) to the SCI P427, he was well placed to reassure the group of the rigour applied when writing the specification document for reused steel and emphasised how it approaches testing and grouping in much the same way as is done for new steel manufacturing. It was also explained how the new SCI P440 will soon be released for steel pre-1970.
It was interesting to hear Michael’s thoughts on the financial incentives. He showed (see below) how the difference between scrap and new steel has been consistent over many years - an opportunity for reuse to close this gap perhaps? But he also flagged the ‘botheration’ involved with reuse of steel, noting that this must be considered in any analysis.
As well as touching on business models such as a liquid second-hand market (not really happening yet), or direct project-to-project sharing (more common), Michael suggested further guidance is needed in these three key fields:
UKCA marking and CE Marking
Damage Condition Assessment
Insurance and Risk (nicely moving us into the discussion)
So onto the conversation…
What are Insurers Looking For?
The key takeaway for me was that these are normal, reasonable, curious people who were keen to learn more about this. They want to know early if this sort of thing is being proposed on a project, so they can ask questions and go on the journey together with the project team. I recall Mark Allan saying how frustrating it is when this sort of thing is covered off with one sentence on page 217 of a design report - not helpful!
It was useful to hear about the different perspectives of the Underwriters and the Risk Engineers. Underwriters are primarily responsible for insurance T&Cs and would look for long term precedence for methodology and materials, team experience (design and construction), as well as considering robustness, durability and adherence to standards (think risk of inherent defects). Loss history of projects influences the T&Cs and rates - this is backward looking which can lead to innovation posing difficulties in respect of established underwriting models. Risk Engineers are the technical advisory function and whilst they are involved in the above, they concentrate on the technical justification of any proposal which is fed back to the Underwriters.
We often say “steel reuse has been happening for years in existing buildings and refurb projects” , but we faced a challenge to demonstrate this, which the Risk Engineers thought could help get insurers who look to the past to get more comfortable with the idea of steel reuse.
Information is key. The group were keen to hear how grouping can occur during testing of reused steel and stressed the importance they place on traceability. I noted how material passports are rapidly developing and this sort of tracing information from donor sites will not be lost in the process. We even discussed that in theory a steel member could be reused for a third, or fourth time, assuming appropriate provenance and checks are carried out. A problem for the future perhaps?
Quick Lessons on Insurance
Types of Insurance
We talked about the types of insurances which was useful to highlight that all three mentioned below have reasons to want to know about steel reuse on a project. The first two cover the build and operation and the third is more optional.
Contractors All Risk (CAR) - covers work in progress on site and is designed to cover a wide variety of the common risks you might encounter and resulting damage. Sounds good, but beware there is probably an exclusion of defects and there could also be ‘Design Exclusion’ clauses, more below.
Property/Buildings Insurance - covers the costs associated with repairing and rebuilding the property (bricks and mortar plus fixtures and fittings) against things like fire or storm damage. This is after the construction has PC’d.
Inherent Defects Insurance (IDI) - covers the cost of repairs or rebuilding if damage (often policies related to structure) appears months or years after PC. Latent defects may be caused by a fault in the building’s design or construction, or by faulty materials (so pretty relevant to getting comfortable with steel reuse then!). To be able to take out an IDI policy, you should engage the insurer prior to or during construction, so they can inspect the construction process.
DE and LEG Clauses
We got into the weeds a little bit here, but I definitely learned something. Note these useful links12 for further reading.
Design Exclusion clauses are found in an All Risks policy and can be significant. They limit the insurer's liability to pay out in respect of damage arising from defective design, workmanship, plan, specification or materials. There are five types of DE clauses (DE1 to DE5). There are also similar LEG (London Engineering Group) clauses which largely serve the same purpose.
Putting the detail aside, this comes back to knowing the policy that is being procured and sharing information about the project early to flush out any issues or uncomfortable exclusions.
Is Accreditation the Answer?
The final point we discussed was how do we know the Structural Engineers and Consultants working on projects with steel reuse know about the specifics of reuse, understand the risks and are familiar with the different specifications? Our short answer was that on the large central London projects where this ‘is a thing’ we generally have top notch Structural Engineers who are very au fait with the emergence of steel reuse, with many being the pioneers.
However if the reuse of steel grows, we all saw risk in uneducated project team members not understanding this niche within wider structural design. A suggestion was a simple accreditation, which would demonstrate a basic level of knowledge and could prove very useful when discussing project designs and steel reuse on projects. I will be watching this closely to see how this idea evolves.
https://www.localinstitutes.cii.co.uk/media/16513/contractual-and-wording-considerations-in-construction-insurance-pesentation.pdf
https://www.constructionnews.co.uk/archive/the-ins-and-outs-of-insurance-21-12-2006/