EPS Construction

Insurance markets regularly cycle between hard and soft markets. We are currently in a hard market.

This means that the insurance companies are carefully reviewing their risks and carefully considering how much cover they will place and on what terms.

There have been some recent substantial fire losses with EPS buildings in Australia, including a loss in excess of $A60m, in a Queensland bacon factory, in 2016 and a $A400m loss, in a South Australian abattoir, this year.

This experience is now impacting on New Zealand and insurers are increasing the cost of premiums, the value of the deductibles and reducing the amount of cover that they will place on EPS buildings. Several insurers simply will not underwrite EPS risks (whether sprinkler protected or not) but may write PIR. Other insurers have communicated that the only form of protection they will consider acceptable for EPS exposed risks is for there to be a fully code compliant sprinkler system including the initial inspection, and the biennial re-inspection being current and all defects remedied.

Buildings constructed with PIR, while not required to be sprinkler protected, may also be subject to restrictions in capacity from insurers.

Those advising on the design and construction of insulated buildings need to take cognisance of this and ensure that their clients are well informed of the construction implications on the insurability of these types of buildings.


Given that there are a number of building owners that do not bother carrying out remedial works on sprinkler system defects they may have no idea that they could be limiting their insurance cover.