Will a polar vortex cause havoc for your commercial clients?

Canada’s cold right now, and businesses in this country are well-versed in property risks caused by freezing temperatures. Yet even a single freeze-related oversight can trigger multiple insured losses.

For example, a failing chip in a policyholder’s heating, ventilation and air conditioning (HVAC) control panel can result in frigid air being blown into poorly insulated spaces. Water pipes in that space can freeze, then burst and flood offices – destroying servers, floors and furnishings.

Likewise, frozen clumps of wood chips could jam an outdoor conveyor at a pulp and paper mill. Or a snowfall might melt and then re-freeze, crushing the roof of a factory while its staff is away on vacation.

Increasing climate variability complicates freeze-risk management. Warm air in the Arctic makes North America colder by disrupting the polar vortex, sending sub-zero temperatures into hot places – as occurred in the deadly ‘Great Texas Freeze’ five years ago.

Overcome complacency

Freeze losses are surprisingly prevalent. A study our firm conducted on losses over a recent 20-year period finds our Canadian operation saw nearly 650 freeze-related losses totaling US$110.22 million.

Industry is more effective at preventing freeze-losses than businesses with fewer workers on site. Roughly nine out of 10 claims we see are for facilities like offices, condominiums, hospitals, and schools.

Even careful managers can become complacent about freeze risk, overlooking hazards such as:

• old, untested heat-trace wire that no longer works at -40° C
• wet-pipe sprinklers in areas subject to temperature change
• underground water mains located less than the recommended burial depth and lacking heat tracing or pumps to keep water circulating

Dry-pipe sprinkler systems can also lead to losses. For example, a riser room could lose heat, causing the dry-pipe valve to trip and fill with standing water. Also vulnerable are boilers, conveyors, and process equipment in warmer locations that can be exposed to the elements. Likewise, dryers for pressurized instrument air systems may be undersized, and even steam systems may freeze if condensate-return piping is not insulated.

But if underwriters and brokers understand these hazards, they can help client businesses reduce loss.

Oversight risk

In places where frigid temperatures are normal, a typical freeze loss results from a change within a facility. This could be as simple as failing to replace insulation after a repair or leaving a door or window open. Sometimes, automated louvers (angled slats used for ventilation) fail to close, freezing nearby sprinklers and water coils in air-handling units.

To remedy this, a continuously roving watch team of people should monitor building temperatures. This is particularly important for idle or vacant buildings, even if they’re only closed for a few days.

In regions where freezing is rare, it’s important to have an alert weather watch and onsite portable heaters. Inadequate heat in stairwells and above suspended ceilings – along with inadequate insulation – can lead to freeze-ups. And frozen sprinkler systems can make the facility vulnerable to fire.

In temperate regions, local infrastructure can be an issue. Even in Canada, some areas may not have enough snow removal and ice-treatment equipment to respond to a weather event spurred by a significant temperature shift. This can result in roads that are impassable for days.

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Utilities may also be reduced or lost, affecting production and heating. In these cases, it’s vital to identify equipment and piping that should be drained, and to train operators and maintenance staff how to prevent process upsets when draining.

A winter checklist

Here are few ways clients can get through challenging winters unscathed:

1. Make a freeze-emergency plan that includes a reliable team to watch the weather. Before cold snaps arrive, revisit training so employees follow the plan.
2. Install a backup fuel source if you have an interruptible contract that cannot be changed.
3. Obtain portable heaters to use in cold weather emergencies.
4. Keep operating during deep freezes but prepare for power outages and resulting loss of heat.
5. Inspect facilities frequently, ensuring windows, doors, and other openings in the building envelope are closed. Make sure automatic louvers are operating and determine where the facility may be vulnerable.
6. Establish preventative maintenance programs for the winter months.
7. Test heating systems regularly, and secure ample fuel supplies.
8. Inspect heat-tracing equipment in outdoor piping and equipment, and confirm insulation is in place.
9. Verify dryers on instrument air systems can eliminate condensation during the coldest weather.
10. Use freeze maps to spotlight areas where the 100-year return period daily minimum temperature is -6.7°C or colder.

Even the smallest oversights can disrupt businesses that have weathered freezing temperatures for decades. Freeze losses are surprisingly common, and vigilance can keep your clients in business.

Neil M. Chaudhuri is operations chief engineer for Canada at FM Global, a commercial property insurer.