The legal and regulatory minefield surrounding dangerous goods is about as hazardous as the substances themselves. But dangerous goods don’t always require HAZMAT suits and gas masks – they can be everyday items your clients may be using, buying or selling. According to Whitbread Insurance Brokers Account Manager Adam Luscombe: “If you have the ability to pollute, you’ve got exposures.”
LPG cylinders, spray paint, chlorine, batteries and petrol all fall under one of nine dangerous goods classes. In fact, people often treat these materials with such disregard that it sends Store-Safe Managing Director Grant Breeze, a dangerous goods storage specialist, high-tailing it out of inspections.
“I’ve walked into premises and backed straight out again because the smell of acetone and other solvents is thick in the air,” Breeze says. “I’d like to say that’s a once only, but it’s not. Sometimes I just think, ‘mate, you have got to be kidding me’.
“Of late, there is a greater education and understanding of the dangers. It’s the small proportion of risk-takers who are causing all the problems. When I say the small proportion, I mean about 40%.”
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Numbers that high spell opportunity for insurance and risk management professionals. But you need to spend time educating and convincing businesses of the need to employ risk mitigation strategies, or the opportunities can go begging.
“A broker goes in and says, ‘okay, you want insurance? This is what you’re going to have to do: You’re going to have to get some dangerous goods storage in place’,” says Breeze.
“I can tell when insurance brokers go through an industry because we will get lots of phone calls and they’ll all get quotes, and then you ring them back over the next six-to-eight weeks and everyone is exactly the same – ‘well look, the broker hasn’t come back so it doesn’t matter’. On so many occasions I know businesses just show the insurance guy the quotes, they write up the insurance, go away and the business never buys the dangerous goods storage stuff. The workplace is still as dangerous as when the broker walked in.”
Under Australian Standard 1940/2004 – an almost 200-page document – there are rules on everything from storage systems, volumes and distance from ignition sources, to lighting, ventilation and signage. The requirements vary from, and within, each class of dangerous goods and the onus for correct storage is on businesses, which are required to self-assess.
“The rules and regulations surrounding AS 1940/2004 are complicated, detailed and, in many instances, too complex for most company management,” Breeze says. “The complex nature of self-assessment rules has created an air of, ‘I’ve assessed where we store our dangerous goods, and it looks okay to me’.”
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When management is reluctant to invest in compliant storage due to financial issues, Breeze says the question then arises: if there is an accident and workers and the environment are damaged, who will be responsible?
“Will insurers back off claims and state that they were not aware of the situation prior to issuing a policy? And will those insurers be open to litigation?” Breeze asks.
“Insurers and brokers have a responsibility of due diligence when assessing insurance coverage for themselves and their clients.”
Meanwhile, the transport of dangerous goods is governed by state, territory, federal (Australian Dangerous Goods Code) and international law – much of it conflicting, according to Petrolink Engineering Managing Director Barry Boné, one of the country’s leading dangerous goods consultants.
“Quite often when I go to see a customer they’ll say, ‘we can’t be bothered reading all this stuff – you know about it so just go ahead and do it’,” Boné says.
“There’s probably half a dozen key standards that apply and all of those standards are referred to in different parts of legislation and regulations, and it’s just too complicated for people to follow it.”
Requirements differ between mode of transport – road, rail, air or sea – and relate to things like packaging and performance testing, unit loads, placarding, vehicle requirements and procedures during transport emergencies.
With so much to wrap your head around, Boné recommends brokers and insurers partner with consultants to reduce the risk exposure, not only of their clients, but also themselves.
“Obviously they can’t know everything across the board, so I’ve had quite a few incidents where I’ve been asked to go in and do an investigation on a factory that’s caught fire and burnt down,” he says.
“There’s lots and lots of ways that people don’t store things properly, and the brokers and investigators need to know. I can say to the insurance company, ‘well, if it was my money, I wouldn’t be paying out on that claim because the client hasn’t stored the equipment properly’.”
While there are a range of insurance products available when it comes to the storage and transportation of dangerous goods – with Vero, Arthur J. Gallagher and Zurich the recognised industry leaders – emphasis is often on risk management practices, and then products are generally tailored accordingly.
Vero Insurance Risk Engineering ConsultantWayne Welson explains: “Naturally, prevention is better than the cure, so we look at protection from an initial event and then consider how to minimise the exposure should an incident occur. We typically do not alter our risk-analysis approach between businesses.
“The chemicals may be varied, but the risk-management methodology remains consistent across all industry sectors, whether it is a warehouse storing explosives or a fish-and-chip shop using gas for cooking.”
With so many seemingly harmless substances appearing on the dangerous goods list, Whitbread Insurance Brokers Account Manager Adam Luscombe agrees that it pays to be thorough with all clients.
“When you’re conducting the fact-find with your client, you have to treat the process as if they’re an ASX top 200 company.
“Sometimes it’s a little bit above and beyond for the smaller client; however, all parties need to know what the risks are – it’s all about the discovery.”