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Controlled Environments

Introduction:

The University sector including UniSA, has had many claims for research material stored in a controlled environment.  In response, our Insurer, has implemented changes to their policy wording around research losses to drive a risk management approach and culture by Universities, in an effort to not only reduce the frequency and severity of losses but more importantly to protect important research endeavours from a loss occurring.

Definition:

The key change involves a new section in the policy wording for Research Projects in which the term Controlled Environments (CE’s) is introduced.  This identifies and addresses the similarities regarding the exposures within any environment that has research conducted that requires a controlling mechanism. This could be oxygenated fish tanks, freezers/fridges, insectaries, animal houses, greenhouses, rooms that must be kept a set temperature, dewars, etc. This is not an exhaustive list and if an environment requires a controlling mechanism, then it is captured by these changes.

Mitigation:

A clearly defined term in relation to controlled environments has been included, it is Mitigated.  For a Controlled Environment to be considered mitigated it must have:

  1. A back to base alarm that is monitored 24 hours a day. The alarm must be capable of detecting a change in the environment (temperature and power) and must be serviced to manufacturer specifications.
  2. Back-up Power capable of providing power in the event of a loss of regular power to the environment. Back-up power must be serviced in accordance with manufacturer specifications.
  3. The controlling mechanism, for example a minus 80-degree freezer, must be serviced to manufacturer specifications.
  4. A documented and tested response plan for management of research contents in the event of a failure.
  5. Valuation assessment in accordance with our insurers Research Valuation Guidelines or a similar, approved methodology. (Refer to Controlled Environment Research Guide and Valuation Tools  )
  6. A variation of the above that has been assessed and approved by our insurer and noted within our policy wording.

Where the Controlled Environment does not meet the criteria of points 1-5 or a pre agreed variation (point 6), it will be considered Non-Mitigated, as a result the cover available to it is reduced.

Policy limits & Excess:

For mitigated controlled environments the policy limit is $5m any one event. Our retention (excess) is 20% of the value of the claim subject to a base excess of $100,000.  Any applicable excess is to be borne by the researcher. 

For non-mitigated controlled environments, the limit has been reduced to $250,000 for individual losses with an annual aggregate of $500,000 i.e. the maximum UniSA can claim in any one policy year for this type of loss is $500,000. Our retention is 50% of the loss subject to a base excess of $100,000.

The base excess increased from $10,000 to $100,000 at renewal in November 2019.  As a result Corporate Finance has undertaken to give consideration to offsetting any financial disadvantage to a Researcher caused as a result of the increased excess. Refer to the tables below to see how the excess will operate in different loss scenarios and how much of any loss is borne by each stakeholder.

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Valuing research:

Determining the value of research samples for insurance purpose can be a complex task given the wide-ranging variety of research undertaken by UniSA. Adopting the following 10 principles can assist to simplify the process. These principles are:

  1. The nature of each research project is different
  2. The value of samples cannot exceed the value of the projects total funding
  3. There are administration costs associated with a research project
  4. Primary samples must be collected or created.
  5. Samples are analysed using many different techniques.
  6. There are costs associated with lab space and the storage and maintenance of samples
  7. Insurable value is a function of the time, effort and cost to replace samples
  8. Samples do not increase in value over time
  9. Not all samples can be replaced
  10. Samples derived from multiple research projects may be kept in a single device or environment.

To assist you in valuing your research refer to the Controlled Environment Research Guide and Valuation Tools 

Research Valuation Tool .docx

Freezer and Cold Storage Policy 

Controlled Environment Maintenance Guideline and Matrix