Controlled environments represent the most common cause of claims. And although research is notoriously complex to value, when it is incorrectly or significantly undervalued, it can have major knock on effects if it comes to a claim. This article contains information to help you understand recent changes to protection, the importance of maintaining inventories and introduces the guideline for the valuation of controlled environment contents.

The frequency of spoilage claims has featured prominently in the loss experience of both Members and the Mutual over the past 10 years. Disturbingly, the quantum of losses has increased over recent years and their nature and scope has expanded to include research kept in a broader range of controlled environments (CEs) such as laboratories, aquaria, glasshouses and animal houses. These losses not only cause financial pain but also great frustration and heartache.

We have consoled researchers who have seen years of their life’s work lost due to a freezer door left open or a power cut. We have witnessed people having to beg their funding body for extensions. We have seen PhD students unable to complete their degree as their thesis can’t be submitted due to unfinished research.

Our claims experience tells us that research losses occur due to a range of causes; the most common being equipment failure, third party negligence, power disruptions and human error – have you mitigated against all these risks?

Unimutual and its Members have a strong joint interest in preventing research losses. Increased claims create pressure on the retained claims layer for Unimutual and ultimately on the Cross-Class Aggregate reinsurers that protect the Mutual against accumulated losses. Our insurance and reinsurance partners are placing more focus on research protection and, in order to manage the cost to Members, it became necessary to update the protection wording regarding research. We must remain committed to risk mitigation efforts in order to continue enjoying the benefits of research loss protection.

So, what are the changes and what do they mean for you?

Changes to Property Protection

Your institution received notification of the protection wording changes in August of last year – if you have any questions or would like to be re-sent this, please contact us. Here is a summary of the key changes that were made:

• A new section relating to Research Projects.
• References to Temperature Controlled Environments (TCEs) have been removed from the wording.
• Instead, protection now covers a wider range: the newly defined Controlled Environments (CEs). This is designed to include loss risks associated with any research environment that requires a controlling mechanism. For example, oxygenated fish tanks, freezers/fridges, animal houses, greenhouses, rooms that must be kept at set temperature, dewars, etc. are all now included. This is not an exhaustive list and if an environment requires a controlling mechanism, then it is considered a “Controlled Environment”.
• Two new terms were introduced to further classify these environments: Mitigated and Non-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 and must be serviced to manufacturer specifications.
2. A back-up power source capable of providing power in the event of a loss of regular power to the environment. The back-up power source 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 the management of research contents in the event of a failure.
5. A valuation assessment in accordance with Unimutual Research Valuation Guidelines, or a similar approved methodology.

OR

6. A variation of the above that has been assessed and approved by Unimutual and noted within the Member’s wording.

If a Controlled Environment does not meet the criteria of points 1-5 or the variation pre-agreed by Unimutual (point 6), it will be considered Non-Mitigated for the purpose of claims assessment.

These definitions also dictate intended limits. The changes have been effective since 1 November 2019, although the Mutual has allowed a one-year grace period for Members to come up to speed, ending 1 November 2020.

Inventories

Knowing what you have, where it is, and importantly, what it is worth is an essential starting point for protecting research. An inventory that covers the type, location, nature of contents, their value and the mitigation in place (described above) is an important tool that provides “the source of truth” regarding research undertaken across the institution, often across several different campuses. It is invaluable when conducting a mitigation gap analysis and can help answer questions like “Are the most valuable research endeavours adequately protected?” Find a link to an Excel database template here.

If you have not already developed an inventory, this is the first step. For institutions with many Controlled Environments, it may not be financially or logistically viable to mitigate all of them, in which case best practice is to prioritise where the most value lies and ensure that is mitigated with back-up power and the other fail-safes. Identifying the highest exposures is therefore the second step, and implementing the mitigation is of course the third.

Guidelines for Valuation of Controlled Environment Contents

To assist Members, we have prepared a comprehensive guideline for valuing the contents of controlled environments and research projects generally. It is designed to assist researchers, technical officers, laboratory managers and risk and insurance officers to consistently value research projects and samples for the purpose of adequately insuring and physically protecting them.

It is divided into five parts:

• Principles of valuing research samples and projects.
• Methods for valuing research projects and samples.
• Types of Controlled Environments.
• Common research risks and causes of Controlled Environment losses.
• Best practice protection for research projects and samples stored in Controlled Environments.

The intent of the guideline is to provide Members with practical tools to establish the insurable value of research samples, projects and animals. This will facilitate more accurate declarations of sums insured, help articulate the importance of the research and contribute to the development of business cases to improve physical protection.

Available resources and services

Notwithstanding the current lockdown obligations across the nation, we are still able to provide the same level of consultation, albeit not at your campus, rather via online meetings with relevant staff. We look forward to visiting you on campus again as soon as the current pandemic situation abates.

So how can you ensure you have mitigated the necessary environments ahead of the deadline? Unimutual provides the following resources and services to help Members become mitigated and avoid unnecessary losses. Please get in touch to access any of these: 

Resources to value research

• Risk consulting services in the form of on-line meetings to assist in developing an inventory and valuing research.

• Guideline for the Valuation of Controlled Environment Contents.

Resources to manage Controlled Environment risks

• Controlled Environment database template (excel spreadsheet)
• Online seminars to discuss Controlled Environment management.
• A gap analysis service. Again, we can conduct these online, given you have prepared an inventory.
• Calculators including: Controlled Environment Research Projects Costs calculator (Appendix in the Guideline), or an excel-calculator-version.
• Presentation content from the Controlled Environment Discussion Group held by Simon Iliffe on the 8th July
• Controlled Environment Maintenance Guideline and Matrix

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