Welcome to Inland Marine Underwriters Association's Warehouse Legal Liability Baby It's Cold Inside webinar. I'm Lillian Coulson, and I'm thrilled to introduce today's webinar. I'd like to thank everyone who's joined us today. We have over 160 members registered for this webinar, and we look forward to your participation. Before we get started, we have a couple of brief housekeeping items I'd like to review. To help reduce strain on your local network, we recommend that you close any unnecessary browsers and internet-reliant programs. You'll find that your attendee control panel on your screen will minimize by default. At any point, you can click on the orange arrow and uncheck the auto-hide option to access your control panel. If you have questions for today's presenters, you have two options. One, you can use the Q&A box in your control panel to type in your questions and then submit them, and I'll share them with our presenters as time permits. 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I'd also like to thank our esteemed presenters, Michelle Siple and Craig Tuakala, for bringing this webinar to fruition, as well as my colleagues, Eileen and Ali Monreale, for coordinating this webinar with our presenters. Now without further delay, I'll introduce today's instructors. Michelle Siple is the head of Inland Marine and Builders Risk at Everest Insurance. She's a proven leader with a broad marine underwriting background. Michelle is a leading expert on inland marine insurance with more than 25 years of experience. As the head of Inland Marine, Michelle is responsible for developing underwriting strategy and policy, which includes minimizing volatility through effective portfolio management. In addition, she leads the division in product development, developing underwriting guidelines and rules, as well as using sales and underwriting expertise to assist in the field with growing profitable portfolios. Michelle is a member of IMUA's Board of Directors, and she's also a past presenter for IMUA's Northeast Regional Advisory Committee on the state of the inland marine insurance market. Craig Tuakala is a property specialist based out of Chicago, Illinois, servicing the upper Midwest. He has been in insurance risk engineering since 1990. He started his career at Chubb in 1993, and he became a property specialist in 1995. Craig has attended numerous training courses through the National Fire Protection Association and Society of Fire Protection Engineers. His current role includes servicing of large customers in a variety of industries that include healthcare, industrial, warehousing, sporting venues, and power generation. Craig also plays a key role in the training of new consultants in property conservation, writing of internal standards, and consulting with less experienced staff. He has performed numerous training programs, including presenting at the National Fire Protection Association Annual Conference. And now, without further ado, here is Michelle Sippel. Welcome, Michelle. Thank you, Lillian. It's great to be here. Hello, everyone. I can't see you, obviously, but it's good to be here, and I look forward to an interactive session today. So the agenda, oops, just make sure I click this, all right. The agenda today is really, I'll be reviewing the underwriting aspects of warehouse legal liability, and Craig will be going over the engineering piece of it, which is certainly important, especially when it comes to cold storage. So I'm going to cover the, you know, warehouse legal liability coverage, contract wording and liability, what's a receipt versus, you know, a contract, spoilage and valuation. And then we'll get into the risk engineering piece, which is pretty robust and very important since we're dealing with cold storage versus dry storage. So it's very critical. And then we'll get into a question and answer session as well. So, okay. So what is warehouse legal liability? Unlike other lines of handling marine, it's a third party coverage, similar to motor truck cargo. Coverage is triggered when the warehouse operator fails to exercise reasonable care in the handling or storage of customer goods. The cold storage warehouse industry is dominated by about 10 major players, and the industry continues to experience consolidation. You know, with the relatively new market forces, including, you know, food delivery and subscription box services, online grocery delivery, and the huge rise in the use of biologic and specialty pharmaceuticals, which require cold storage, they're all impacting the industry growth. So, you know, we all are looking, you know, I've, especially during this pandemic, you know, online grocery shopping, pre, you know, pre-made meals, delivery, that is all really increasing the need for this and the demand for this industry. So our first slide is going to be a poll question. What is the average occupancy across U.S. cold storage warehouses? And we'll give you a couple minutes to decide on that. 85% is the majority. Wow, you guys must have cheated, I think. That is the answer, 85%. And I'm asking this because the cold chain is a big industry and continues to grow. With an occupancy rate that high, we can see that with the growth, there's a continued need in the future for this industry. So let's see, what do we got next here? So we actually have another poll and there we go. So how big is the U.S. cold storage market size? And this is as of 2018. $10 billion, $50 billion, $15 billion, $100 billion. 50 billion. That's the majority of folks thought it's 50 billion. It's actually 15 billion. So still big, but not quite as big as what the audience thinks. And again, I ask this because it is big business and there's a lot of opportunity to provide insurance going forward. And coupled with that, we really need to understand warehouse legal liability and how to underwrite it and properly provide the coverage. Next slide. There we go. So we're going to get into some of the underwriting considerations. And again, if anybody has questions, you can type them in or wait till the end. So in order to underwrite the warehouse legal liability exposure, we need to know more about the warehouse where we're storing the goods. So construction is a really important piece of that, whether it be fire resistive, masonry non-combustible, non-combustible or frame. Let's hope it's not frame. But that's going to also determine the level of protection and the level of fire susceptibility too, depending on the construction, like you would with any property risk. Sprinkler protection as well is key. And you need to make sure that it's adequate for the type of commodity that's being stored. If it is sprinkler, one of the things that Craig will talk about a little bit later in the presentation is, is it a wet sprinkler pipe system, which I hope not in a cold storage warehouse, because those pipes will freeze. But the dry type is what's really what we tend to see. And, you know, again, important. And then the other piece of it is, are the sprinklers, are they at the proper height compared to the storage racks? You do find a lot of rack storage within a cold storage warehouse. And you want to make sure that the sprinkler height is above the goods, should there be a fire. Some other underwriting considerations. Confirm the protection class of all the scheduled locations. So, you know, how far are they from the fire department? Should there be a fire? Protection class is a really important piece of, of your underwriting. And again, you know, to determine rate and also to determine, you know, risk acceptability. And there are three types of warehouses, public, private, or bonded warehouses. We're mainly, usually we're talking about warehouse legal, we're talking about goods of others being stored. So it's, it's usually a public warehouse because we are storing goods of others. And public warehousing is a cheaper option for many of our insureds versus, you know, private. And it's, it's, it can be convenient when utilized for short term storage. The spaces is usually readily available. So you don't have a whole lot of wait time. But seeing we're seeing in the industry with, with, you know, occupancy rates at 85%, I believe there's going to be more need for newer, newer facilities coming online as well. And there are no hefty startup fees or property taxes when you, you know, when you're using a public warehouse. The cons of that, as we all are probably very aware of, is that you have to share the space with other companies. And, you know, then you have to be concerned about what else is being stored in there and where your goods are being stored versus others. So that is the downside. And then if you need extra space at any given time, you know, you're really subject to whatever the, the availability is at that warehouse versus having your own. So, so you really got to look at what, what makes the most sense for you. The pros of having your own private warehouse, it's solely your company that's using it, right? You can train your team specifically for that warehouse and your supply, supply chain alone. And you have more control over the daily activity and management of that facility. Again, the cons are, it's more expensive than a, than a public warehouse. You know, however, you know, over time a private warehouse space can be cheaper than renting a public space from that perspective. And then it's, it's a, it's a longer commitment, obviously, but your own warehouse and it's, you end up paying property taxes so that it's more costly. And then we also, you know, there's a bonded warehouse is another kind of type of warehouse that, that we see. And those are usually, they, they let businesses store their goods for faster delivery with the advantage of pushing out the, the really the key is the pushing out the payment of custom duties until the goods are released from the bonded warehouse. So that really, that, that helps, you know, the, the, the insured to, to not have to pay anything until they do get a receipt for, for their goods. So some other considerations when we're, we're looking at warehouse legal liability, a big concern for warehouse operators is, is knowing, you know, what the employee hiring practices are. So, you know, you want to know who it is that's handling your goods. Background checks are important. Also security in the warehouse, depending on what's stored there, you know, what, what kind of alarm system, central station, things like that, do they have? And again, depending on the commodities that are stored, you know, they may or may not be, you know, subject to, to theft. You know, if you're storing pharmaceuticals and depending on the pharmaceutical, it could be much more of a, a, a theft target than, you know, frozen foods, you know. So those are some of the things you should be looking at as well. And one of the key pieces of underwriting warehouse legal liability is the warehouse agreement. The warehouse agreement outlines the terms of the storage, right? So this will show what the warehouse is responsible for and what their legal liability is. So usually, you know, when you see a warehouse agreement, it, it shows, you know, what the warehouse is responsible for and what their liability is. So when you see a warehouse agreement, it shows their limitation of liability and it could revolve around, you know, a per pound limitation, or it could be, you know, one example would be, you know, sometimes you see it based on their monthly storage charge. So it could say 10, 20 times the, the monthly storage charge could be their limitation of liability. So it's important to get a copy of that receipt and understand what that, what the liability is for that warehouse. Oops, I gotta go back. We did that. All right. Another, another piece is direct damage coverage. So sometimes you're insured while you're, you're the customer for the warehouse, right? So our insured is the warehouse operator, but the customer may require that there be direct damage coverage for their goods that are in storage. And this is basically the equivalent to providing first party coverage for property of others in your care custody and control. And it can include, you know, cat perils as well. So, you know, it's almost like you're writing first party, you are writing first party coverage for the goods and it switches from being negligence, legal liability to first party coverage. So you need to make sure that you're charging that way and that you're comfortable providing that coverage based on the individual risk characteristics, risk characteristics. Declared value is another option where the customer may require that the warehouse operator ensure the goods for say, they have a limit sometimes in their contract. They'll say we need coverage for a million dollars, right? Or $10 million, whatever it is. So again, that that'll help you to determine, you know, if there's enough coverage and what kind you need to provide for that warehouse operator. And it could be based on customers as well. So you may have different customers that have different requirements. And sometimes, you know, you will list that in your contract, your insurance contract to state what that customer coverage is. It's also important to understand the operational exposure and what else the warehouse is doing. So many times your warehouse operator does more than, provides more service than just storage, right? They could be doing crosstalking, providing labeling, consolidation. So you need to understand that. And if you're being asked to cover that, you need to make sure again, that your contract is providing that kind of coverage. So spoilage and valuation, and really this certainly comes into play with cold storage versus dry storage warehousing. So does the contract or the warehouse receipt cover spoilage? Is it stating that spoilage coverage needs to be or is provided, right? So usually your standard contract, your receipt does not require that because acts of God are not covered. And it's really negligence only coverage and spoilage, change in temperature, that kind of stuff is usually excluded. But when you do have to provide it, or when you are being asked, you know, it's important to check your policy coverage. So for example, the AAIS products typically excludes it under the warehouse legal liability. But, you know, it'll exclude spoilage, but maybe it'll add, you know, specified perils might be covered as a result of that spoilage, temperature and humidity. Most policies don't cover loss caused by dryness, dampness, humidity, or changes or extremes in temperature. So important to take a look at that. And is contamination covered? So sometimes there may be a need for contamination, especially in a cold storage warehouse. So, and many times cold storage warehouses use refrigerant to maintain temperature. I mean, that's typically how they're going to do it. Ammonia is the most efficient form of refrigerant typically used. And once you have an ammonia leak, it's nine times out of 10, you're going to lose all the product that you have. And again, so, you know, Craig will get into this later in the presentation about controls in place, things that, you know, are recommended, things that you need to pay attention to, to make sure that you're comfortable again with that exposure. Talk about that. I have one more comment. So one thing to note is that in the typical AIS contracts, there's a, there's an endorsement for cold storage, right? And the coverage is direct physical loss resulting from spoilage to perishable stock of others that you store at your warehouse. And it allows you to put a limit on that. The coverage limitation is we only cover loss resulting from spoilage when the spoilage is caused by a sudden or accidental breakdown or malfunction of refrigeration equipment at your warehouse, an error in maintaining the temperature of the cold storage area in your warehouse, or the incorrect usage of the refrigeration equipment in your warehouse. And those two last ones are pretty interesting, right? So operator error, you could very easily have an operator, and I've seen this a number of times, set the temperature control incorrectly to the wrong temperature, temperature rises, you have spoilage. And in this endorsement, it would provide that coverage. So again, that's very broad coverage. And again, as we get into the more specifics of the engineering, which I think are the key whenever you have a cold storage warehouse, those are key in selecting your risk, frankly. So at this point, I'm going to turn it over to Craig, who's going to talk to us about risk engineering and cold storage warehousing. Thanks, Michelle. So I'll go ahead and take it from here. First, I have the standard sub-disclaimer. Basically, what this says is at the end of this presentation, you have to forget everything I just said, if you read through all that. So just keep that in mind that five minutes after this, you can't remember anything. Sorry if there are any attorneys present, but I always like to make that a little bit humorous. So just a quick agenda here. Some items we're going to cover. We're going to talk about the fire hazards associated with warehouses and specifically related to cold storage warehouses. Concerns about ammonia refrigeration. We're going to talk about some actual loss examples. And then we're going to kind of go through some items to consider when looking at a cold storage warehouse. One thing I want to say is from a risk engineering perspective, when we're asked to do warehouse legal liability surveys, we really don't view those any differently than if we were asked to do a property survey. Michelle mentioned all those different stipulations that may or may not be in the policy. As a risk engineer, I typically don't know that. So I'm going to make the assumption that we're looking at every peril, be that contamination, be that loss of temperature, or loss of temperature control, be that fire. So generally, from my perspective, I'm going to look at it the same way I would look at a property peril. I understand from an underwriting point of view, you're probably going to, not probably, but you're definitely looking at it differently. Let's talk about warehousing and fire exposures in general. So I would say that warehousing operations are not, they don't have a high likelihood of fires. They're not like restaurants where, you know, we kind of say there are two types of restaurants, those that have burnt down and those that will. But they're not uncommon either. NFPA says that there are about 240 warehouse fires a year. So if you do that by state, you know, what is that, about five per state? So not a lot. If we look at the causes, leading cause of warehouse fires, arson. Second leading cause is electrical. Then we get into heating equipment, probably not real common in a cold storage facility. Exposure fires and smoking. So I get this question a lot of times, well, what's going to start a fire? And I don't like to say it necessarily in uncertain terms, but you could say something like people, maybe an employee. I've had situations where a disgruntled employee has started a fire. Matter of fact, I had a customer, he started two fires. He burnt down one building, they moved to another building and he burnt down that building too. The second time they caught it. Electrical, you wonder what type of electrical there might be in a warehouse. Here's a picture of a conveyor. That conveyor has electrical motors. So there's another type of potential fire exposure. So not on the high exposure end of fires, but fires in warehouses can definitely happen. And when they happen, they're typically bad. So let's talk specifically about cold storage and some of the challenges, relationship. I jumped ahead. Some of the problems associated with cold storage warehouses. We typically use sprinkler systems to control fires in most situations, certainly in the US. Obviously, putting water into a refrigerated or a freezer space is not a good idea, right? It's going to freeze. So there are different types of sprinkler systems that we typically use when we're looking at a cold storage facility. Michelle mentioned dry pipe systems, but I would like to actually say, if you were to ask me, I'm going to build a cold storage facility and I want to put in state of the art fire protection. What type of fire protection should I put in? My answer to you would be a double interlocked reaction system. Now what a double interlocked reaction system means is I need two separate and distinct actions for that sprinkler system to work. For one, I need the sprinkler to operate. So I need that sprinkler, which is a heat activated device. I need that to heat up and have the fusible link or the frangible bulb break, which is going to then evaporate air in the case of a preaction or even a dry pipe system. The difference between a dry pipe system and a double interlocked reaction system is that double interlocked reaction system requires one other thing to happen for that system to flood with water. Probably that one other thing in a freezer space is going to be either a heat detector or what we call pilot line sprinklers, which is another set of sprinklers that are just connect to high pressure air. So I need two things to happen. The reason why I want that to happen is if we trip a system in a warehouse, in a cold storage warehouse, here are our options. We actually have three options. Most people say we have two options, but I've seen three options. One is we can take everything out of that freezer space. We can defrost the freezer. We can allow the pipes to thaw, which will melt the ice that's in them. We can fix whatever things broke. And then we can recharge the system with air, refreeze the freezer, and put everything back in. That doesn't sound very desirable, right? Well, the second option is we can take all the piping out of that freezer, all the sprinkler pipes, remove it all, take it out into the parking lot or take it into a heated space, allow it to defrost, fix the broken things, and reinstall it. Doesn't sound that desirable, right? Pretty expensive to do that. The third option, which is one I've actually seen done a couple of times, is you go over to the sprinkler valve, you turn it off, and you say, you know what? Our facility is now non-sprinkler. So that doesn't sound like a very desirable option, but if you look at a cost perspective, which one do you think is the cheapest? By far, turning my sprinkler system off and walking away is the cheapest. So that's why we want to make sure we never trip a system in a freezer. And that double interlock pre-action system is going to really help us here. The dry pendant sprinklers generally relate to if you have what we call a box in a box. So in other words, we have a freezer that might have – it has its own ceiling inside of a facility. We can actually have a wet pipe sprinkler system, and we can use dry pendant sprinklers that will drop down from the wet system into that space. The nice thing about dry pendant sprinklers is I can use an ESFR sprinkler system if I have dry pendant sprinklers. You cannot use an ESFR sprinkler system for a dry pipe or a double interlock pre-action system, because an ESFR sprinkler system is early suppression, fast response. When I have a dry pipe sprinkler system, I'm not getting fast response. I have to evacuate all the air. Therefore, it is not allowed to be used. And when Michelle talked about height of the sprinklers in relationship to the racks, a lot of times in freezer spaces, you end up with in-rack sprinklers. And remember how I talked about the fact that you don't want to damage these sprinklers? Putting sprinklers in the racks gives more susceptibility to them being damaged. So it's kind of a catch-22. I have to put sprinklers in the racks. But if I hit those sprinklers and I break them, bad things can happen. That's why that double interlock pre-action system is very, very valuable in a freezer space. So another thing to talk about, something called ice plugs. Ice plugs are a big problem in freezer spaces. If you ever know on days where it maybe is really, really cold outside, today might be a good day, and you get maybe some condensation on your windows, and that condensation might eventually freeze. Warm air typically is moist air. And generally, when we have either a dry pipe or a pre-action sprinkler system, we're pumping air into that system. The system in the freezer has compressed air in it. Well, that air that's compressed generally has some moisture in it. And when I go from that warm, moist space into that freezer space, the moisture in that air is instantly going to freeze. Over time, that can create an ice plug. You see in this picture, that's a picture of an ice plug. There can actually be situations where that pipe will be completely closed off due to an ice plug. So if I have a situation where I've got a dry pipe or a pre-action sprinkler system going into a freezer space, I need to do an ice plug investigation every year. NFPA requires it. That means I have to take a section of pipe off and look in there and make sure that there is no ice in there. Another thing we have to be concerned about with pre-action and dry pipe systems is corrosion. It's become a real problem in probably the last 20 years. The problem really is related to, there's a lot of different things that are involved in it. But typically, in dry pipe or pre-action systems, we use galvanized piping. Galvanized piping is protected with a galvanization that is supposed to protect it from corrosion. However, just like kind of everything else in the last 15 or 20 years, some of the galvanization practices, they're not as good as they used to be. And during installation, sometimes the galvanization can get knocked off, and there's areas of the pipe that are no longer galvanized and protected. When you have a situation where you've got a little bit of moisture in the pipe, you're always going to have a little bit of moisture in the pipe. You're never going to get all the air. You're never going to get all the water out of the pipe. When you have that in combination with air, that's going to create corrosion. Corrosion can lead to leaks. Leaks can lead to all kinds of problems, including tripping that system that we talked about before. So, there are ways we can fix this. One of them is a nitrogen purge. This device right here is a nitrogen generator. So, in other words, instead of filling up my system with air, I'm going to fill up my system with nitrogen. The nice thing about this is, generally, it takes care of my ice plug situation, too, because now I'm not dealing with moisture, because I'm dealing with the nitrogen, which is not just regular unconditioned air. We can also use treated piping, and we can use thicker piping, which sometimes can delay, but the treated piping and the thicker piping, they're simply delaying. I wouldn't say it's the inevitable, but sooner or later, you're going to have some problems with leakage in systems. I've heard horror stories of systems that fail after 15 years. In West Michigan, in the Grand Rapids area, there was a fire that was related to piping that was failing, and the system tripped on the coldest day of the year, and there's a whole long story to that. But there are a lot of problems. This is not a small problem. It's a pretty large problem, and it's something that people that are dealing with dry pipe systems, most of them have to deal with at some point in time. Another thing, sandwich panels. A lot of times, these freezers are going to have some sort of insulated panel, right? We want to keep the cold in that space. Well, what are we using for insulation in those sandwich panels? Are we using something like polyisocyanurate or mineral wool, or are we using polystyrene? Well, I can tell you historically, polystyrene was used. Polystyrene is foam, plain old-fashioned foam. Guess what foam does? It burns really, really well. In the fire protection world, we like to call it solid gasoline. We can take these polystyrene foam insulated panels, which have metal on either end, but polystyrene foam in the middle, and we can build our warehouse with these things. Now, if we have that nice masonry noncombustible or metal noncombustible building that Michelle talked about, that building class is important, now we've just introduced all kinds of combustible loading due to sandwich panels that are used for insulation. So, what we look for, what I look for when I go out into the field, is a listed or approved panel. Generally, an FM approval is what you want to see. So, an FM approved panel means that it's not going to support combustion. There have been some pretty serious fires that have been as – they don't start with the sandwich panels. The sandwich panels add to the fuel load. All right, so here's our poll question, first one. So, what are the most commonly used refrigerants in cold storage warehouses? All right, we'll give everyone a couple minutes here to answer and we'll see what people said. All right, so here are our results. It looks like the leading one by far was ammonia and the second leading one was freon So I would tell you those are the two correct answers Ammonia is most commonly associated with cold spaces freezer spaces In smaller areas or refrigerated spaces sometimes you're dealing with freon I can tell you that we don't really worry too much about freon It doesn't have those same properties that ammonia has really what we're going to spend our time talking about here is ammonia Ammonia has the exposures some pretty significant exposures And we're going to go into some significant depth and talking about what those exposures are Got to reclaim back the, get to the next slide. So fire is just one of the things we need to be worried about in a cold storage facility. Other things we need to be concerned about are contamination, spoilage, even water damage. Again, as Michelle mentioned, those may or may not be covered under warehouse legal liability. From my perspective, I'm going to evaluate them even when I do a warehouse legal liability evaluation, because I really don't know, unless I've been told, that, you know, the policy is going to exclude that. Typically, as a risk engineer, I don't get involved with policy wording. You can see this picture here. I don't know if any of you can identify what that is. That's actually an ammonia cloud. There was a large-scale ammonia release. It happened to be outside of the building. In this particular situation, an interesting story, it actually went across this little body of water, and there were some people working on the other side, and some of them actually got exposed to ammonia. So kind of a nasty situation. Ammonia is commonly used as a refrigeration medium, mainly because of one purpose. Why do we use most things, right? Because it's cheap and it's widely available. It works really well, it's inexpensive, and it's readily available. The way we use it, typically, is we have an engine room where there are compressors. It pipes to evaporators, so we compress it into a liquid. We send it to an evaporator. The evaporator then essentially exchanges the warm air in a space for the cold of the ammonia, and then from there, it goes back to a condenser. Here's a real simple diagram of how an ammonia compressor system works. My guess is most of you probably don't care that much about how an ammonia compressor system works, but there are some things you probably need to be concerned with. For one, there's an engine room. Typically, that engine room is where your compressors are. My slide moved on me. I'm not sure why. So typically, there is – oh, go ahead. Sorry. We have a question from Katie Kazemi, and she asks, how does an underwriter find out about the panels ahead of time in the underwriting process? Are there any tools available to learn this information, or is it just from the loss control inspection? That's a great question, and here's what I would tell you. It's very difficult to find out even on a loss control inspection because we always ask the question, and about 75 percent of the time, the answer we get is, I don't know. So I would tell you on a prequalification or if you're trying to underwrite this without any risk engineering, it's difficult. It's difficult. I'm not sure I can give you the right answer. One thing I would tell you is age of the building is going to be a little bit of an indicator. A newer building is much more likely to have listed panels than an older building, but even that's not a guarantee. So great question. I wish I had a better answer for you, but boy, there are a lot of times when I have to tell an underwriter, I don't know if the panels are listed or not, and my terminology is always, and I know underwriters probably don't like this, but my terminology is always guilty until proven innocent. So if I can't prove it's a listed panel, I'm going to have to make the assumption that it's not a listed panel. Does that answer the question all right? I don't know if anyone can give feedback, but. Yes, she has a follow-up. What year built are you defining as new? I would say anything in the 2000s probably is pretty new. Anything 1990s or earlier, certainly if it were built in the 1960s, 70s, I'd say the chances of if the panels were put in there, they're not going to be listed panels. If they were put in five years ago, 10 years ago, pretty good chance. All right. Thank you. Yep. So anyway, here's a basic diagram of an ammonia system and how it works. Typically you've got what's called an engine room. An engine room is going to have compressors in it, generally a lot of times multiple compressors. It's also usually going to have an ammonia storage tank, or sometimes it's called a receiver tank. It's going to generally pump a liquid into an evaporator. So the evaporators are those devices that are actually in the freezer space. And then that's what exchanges the heat in the room for the cold of the ammonia. And then from there, it's going to go to a condenser and the condenser is going to recondense it. It becomes a vapor at that point in time. The condenser is going to recondense it back into a liquid. It's a closed system. There should never be any ammonia going out of the system, but sometimes ammonia does get out of the system and that's a problem. So here's another poll. What are the concerns with using ammonia as a refrigerant? I will tell you there's probably more than one answer, one correct answer. Obviously there's more than one answer. Alright, so it looks like we got pretty equal in a few places, but by far I guess the one that most people chose is contamination. Absolutely, 100%. Yes, it can cause contamination. And from an underwriting perspective on a warehouse legal liability, it's probably, not probably, it is our biggest concern. It is also explosive. Obviously, if we have a large-scale ammonia leak and we have an explosion, that's a problem, right? That's a big problem. Here's the, I don't know if this is good news or not, but here's the somewhat good news. Ammonia is explosive, yes, but it explodes in very high concentrations. So the likelihood of ammonia explosion is not super high. It can definitely happen, but if you have proper controls in place, it shouldn't happen. The contamination is much more of an issue because even a small amount of ammonia is going to cause a problem. Ammonia is also definitely an OD exposure for humans. Again, as a warehouse legal liability underwriter, you're probably not too concerned about that. As a property risk engineer, I'm probably not too concerned about that, but overall it's still something we need to be concerned about. It smells really bad, definitely it does. That's nice, actually, about ammonia because if I walk into an engine room and it smells like ammonia, that's a problem. It should not smell like ammonia. I should be able to walk into an ammonia engine room and it should not smell like ammonia. So to me, yes, it's annoying, but it's a good indication that there might be a problem. The corrosive to the building structure, to my knowledge, it's not. That's one I just kind of threw in there, but so you guys pretty well nailed that one, which is good. You guys have been nailing all these. Before you go on, we did have a question about that poll. One attendee asked, what is an OD exposure? Oh, I'm sorry. You know, as a sheriff, you got to use all these abbreviations and nobody else knows what you're talking about, right? I'm glad you asked that. I try not to do that. OD is occupational disease, so some people might also think it means overdose, but it's occupational disease. So something you're going to breathe in and it's going to cause you damage. For instance, asbestos would be a really bad and common, not common anymore, but would be an OD exposure. So, big question. Yep. So as we talked about, ammonia is a problem for several different reasons. Really the biggest one is going to be that it can contaminate. So when we are using ammonia for refrigeration, there are a lot of things we need to have in place. We need to have systems in place. We need to have proper preventive maintenance in place. We need to have ammonia detection. So anywhere that ammonia is being used, I want there to be ammonia detectors. Those ammonia detectors should be set to alarm pretty early in the event, generally somewhere around 50 or 100 parts per million, which probably doesn't mean a lot to you guys. The problem with that is that 100 parts per million of ammonia, I've already lost my product. I've probably lost my product the minute I have any ammonia leak at all. So it doesn't necessarily save us from that. It does save us from the OD exposure. It also saves us from that explosion exposure. Facilities that use more than 10,000 pounds of ammonia, they should be doing process safety management. Process safety management is basically a procedure where you're looking at this and looking for common things that could go wrong, and you're putting procedures in place to make sure those things don't go wrong. Now you might ask, what is a common, is 10,000 pounds a lot of ammonia? For a cold storage facility, not. 10,000 pounds is fairly commonly used for most cold storage facilities. The last facility I was at, it was a little bit of a larger size facility, but not huge, a couple hundred thousand square feet, had 35,000 pounds of ammonia. So it doesn't take much to get to that to that PSM requirement. So as we already talked about, if we have an ammonia leak, we're probably going to lose our product. We have an ammonia leak in a refrigerated space, we're probably going to lose our product. If we have an ammonia leak inside of an engine room, hopefully we won't lose our product. But if we have something like, let's say our engine room directly connects to our freezer space or our condition space through a door, then I could easily have an ammonia leak within my engine room that is also going to contaminate my product. I remember it's been years ago, but a facility that had along the order of magnitude of 75 million dollars worth of cheese in it, and the engine room opened directly into the freezer space. Actually it was not a freezer space, it was a refrigerated space, but, and it wasn't a gasketed door. So if I had an ammonia leak in my engine room, which could happen in a lot of ways, I could quite possibly lose 75 million dollars in cheese, which is obviously a bad situation. One thing I will tell you is there are new systems out there that, although they still use ammonia, they transfer that cold to another gas such as CO2. So there's a system called a cascade system, that's what this picture is, where the ammonia is used to chill CO2. CO2 is benign. Most of, you know, CO2 is in the air. So if I have a CO2 release, I'm not going to cause any damage at all to my product. So a much safer system, it's where the feature is with ammonia refrigeration, but you're not going to see them all that commonly right now. Ten years from now, hopefully you will, but just something you might want to be aware of. You see something when they're like, oh we have the latest and greatest refrigeration system, we have something called a cascade system, then that really alleviates a lot of those ammonia contamination concerns. All right, how about spoilage and contingency planning? So I know Michelle again talked about the fact that a lot of times spoilage might be excluded, but we're still going to look at it from a risk engineering perspective. There are lots of different things that can happen when it comes to spoilage. Obviously with a conditioned space, we want to keep that space conditioned, right? There might be some of you right now that are having a power outage, or if you're on this call maybe you don't have a power outage, but I know like a lot of places in Texas have a power outage right now. So what are you worried about? Gosh, I have a hundred and fifty dollars in the meat in my refrigerator, and I really hope the power comes on before it gets spoiled, right? That's a big potential concern. Well, guess what? Take that hundred fifty and multiply it times a thousand, or even more. Maybe I have ten million dollars worth of meat in my freezer, and I lost power. Now what am I going to do? Or my refrigeration system broke. Now what am I going to do? So we need to have planning in place to deal with these situations. So the first thing we want to do is we want to make sure that our refrigeration systems are properly maintained, that we keep things like critical spare parts in-house. If I have something that I know is a weak point in my system, or I know might be difficult to find, to replace, I want to make sure I have those. And the other thing is I want to make sure that I've got access to people 24-7, because guess when you're going to have an event? Is it going to happen on Monday at 2 p.m.? No. It's going to happen at Saturday night at 12 midnight, or it's going to happen in the middle of the Super Bowl, or it's going to happen in the very most inopportune time. That's when these things happen. It's called Murphy's Law, right? It always seems like these things happen at the worst potential time. So not only do you want to have a system that's going to alert people, but you want to make sure you've got people that can respond to something 24 hours a day, seven days a week, regardless of whether it's Christmas, or New Year's, or whatever, that we got to be able to respond to this very, very quickly to make sure that we can make the needed repairs. Whether that's in-house people, whether that's an outside concern, we got to be able to respond to that quickly. Contingency planning's also got to look at things like temperature monitoring. Am I monitoring the temperature in my condition space? How about the hold times in that freezer? Most of the time when I go to a cold storage facility, I will ask them, what's your hold time? Every time I've ever asked that question, assuming I have the right contact, they know the answer. Their hold time is 24 hours. Their hold time is 48 hours. If we don't open the door, we can get 48 hours out of it. In other words, as long as I don't open the doors to the space, if I lose my refrigeration, it will hold temperature for a certain amount of time. And a lot of times that can be a couple of days, potentially. You also want to know what the sensitivity of your product is, right? Is it something like, and I don't know specifically, but I'm guessing the COVID vaccine. If I, if the COVID vaccine, if I had a warehouse full of it, which I would imagine is very valuable, and I lose, some of that is required to be kept in a freezer. If I lose my conditioning, how long does that product have before it's ruined? I need to know that. Backup power. Do I have some sort of backup power for my refrigerated spaces? Maybe I do, maybe I don't. Another one is backup sites. A lot of times what I get is our contingency plan is, we have 24-hour hold time. If the 24-hour hold time is exceeded, we have an agreement with XYZ cold storage and we can move our product there. But what Michelle talked about earlier was that cold storage facilities are at what capacity right now? 85%? And that's probably growing. So how do you know space is going to be available when you need it? And if you lost your refrigeration because of a power outage, how do you know somebody else didn't lose their refrigeration due to a power outage? And now you're competing for that space. If you have an agreement in place, that's great. Some sort of guarantee. But if you have a situation where it's kind of first-come first-served, you might not be the first, first one to get there. So these are all things you need to think about. This particular picture, the reason I put this in here, this is the automated rack and retrieval system. So you're actually retrieving product. This happens to be a cold storage warehouse. It's under construction right now. But this happens to be an area where that robot is going to go pick product out of those racks. So what I will tell you is, if I lose power and my contingency plan is to take the product out of this warehouse and put it somewhere else, how am I going to get it out? I'm not. Because I need power to operate that robot to get the product out. So I better have something in my contingency plan that addresses that. Very, very important. And this type of thing is becoming very, very common. As space gets more valuable, people want to go up and not out. And these automated systems, you're going to see them more and more and more. All right. So here's a true and false question. It's common practice for a cold storage facility to have backup generators. I will tell you, every time I go out to a cold storage facility, it's one of the things the underwriter is like, ask if they have backup power or not. See if you guys can keep your perfect record. I think you've been perfect up till now, so. All right, so it looks like true one out and what I'm going to tell you on this one is the answer is false It is actually not common really at all at least in my part of the country I guess I can't speak to places like California or the East Coast and The Midwest and I could tell you in Chicago. We have a lot of cold stores. There's a lot of food production in Chicago and We have a lot of cold storage facilities and backup generators are not the rule Generally, most places don't have them. Why don't they have them? They're expensive and to have backup Refrigeration capacity to have a generator big enough to feed your ammonia refrigeration system Those are big generators. They're going to be very expensive So you just don't see them that often So what I would tell you is in this case my answer to this would be false All right, so we're going to have another true and false If the cold storage facility is never left unoccupied for longer than the hold time In other words the time that a freezer can hold consistent temperature temperature monitoring is not needed so in other words, let's just say that the my freezer is only My building is only unoccupied on the weekends for 48 hours but the whole time in my freezer is 72 hours and I know that for a fact because I've tested so do I need temperature monitoring? Yes or no? True or false? and on this one Craig the Question actually truncates because it doesn't allow for that large of a question, but you did ask it. So here it is. Okay. Yep This is not an easy question, by the way, but there's a specific reason why I'm asking. And I slipped into my Italian here with falso. All right, so the vast majority of the people said also so What I would tell you is you are correct You might not know why you're correct, but you're correct and maybe you figured well if he's asking the question There must be a reason why so what I'm going to tell you is right now I'm not going to give you the reason why I'm going to tell you the reason why in a couple of slides But there is definitely a situation temperature monitoring in in Refrigerated condition spaces is needed regardless of all time Absolutely regardless all the time unless you're telling me that you know I've got somebody that's going to be there 24-7 and they're checking They're checking that even then you still need some sort of temperature monitor within the space or somewhere like temperature monitoring I probably should have said remote temperature monitoring if the building is going to be left unoccupied I need to have something somewhere that's going to alert somebody Hopefully somebody that will take action Multiple people that my temperature has fallen out of a certain parameter and that certain parameter should be long before any product is damaged right, so you might have a situation where I keep my space at five degrees and My temperature my my product will be ruined if it gets to 25 degrees, so I'm going to set my temperature monitoring at 10 degrees or 15 degrees that way I've got an indication that something bad is happening And I can respond to it and hopefully fix it before we ever get to that 25 degree mark, so Good whether you knew or not it was either a good guess or very knowledgeable And we're going to talk about specifically why that is needed here in a second So now I want to get into some lost examples I think that lost examples always kind of perk everybody up and like wow that can happen right so these are real-world examples Some of these I had first-hand experience with some of them. I didn't honestly most of them. I didn't but some different scenarios Always good to start with fire in 2017 a fire at a cold storage facility caused 3.5 million dollars in damages The cause of that fire was determined to be welding outside of a designated area now You might look at that and say well gosh. Why would anybody be welding inside of a cold storage warehouse? I'll give you one reason why? Because pork truck drivers like to destroy things they like to run into things What if you go into a cold storage warehouse? What is the first thing you're probably going to see the answer is rats and What happens when a pork truck hits a rat? He damages it. How do we fix that well? We could replace the part, but what some people do is they go in there and weld it back together So welding inside of a warehouse is not as uncommon as you think it would be and if we're doing welding in a any kind of a Undesignated hot work area we need to use something called a hot work permit So welding is a really common cause of fires in general But they're not alleviated. I think some people just assume. Oh, it's a warehouse. No one's ever going to be welding in there. Not true People can weld or do hot work and just about any kind of space there is All right another cold storage loss in 1993 a massive fire destroyed an 89,000 square foot cold storage warehouse for a grocery retailer The fire started when a faulty light on a trailer one of the backup lights or one of the tail lights on the trailer Ignited the insulation around the dock. So if you see where that arrow is pointing to that's a little dock seal So it's designed that in the winter time Maybe that if I have that dock door open and a and a trailer pulled up to it As the one is here that I don't let all this cold air in the problem is is that I had an ignition source from my faulty light my faulty wiring and There was combustible insulation in that box seal and it started it on fire And you might say well gosh, that's a weird thing and that would never happen again. This happened multiple times. There were multiple fires associated with these Associated with these dock seals one specifically for a cold storage warehouse so that what I'm trying to get to it is here is what I'm trying to explain is I Get the question a lot of times of well What's the likelihood of a fire or what's going to start a fire in a facility? And I can give all kinds of examples of well this happened once and this happened once The problem is is there's so many weird scenarios of things that can happen. We already talked about arson being a common cause How do you predict an arson fire? Can't right there's just no way And you get a weird situation who would have ever thought that a faulty truck wire on a trailer Would insult would would ignite insulation on a taxi. I mean, I like to think that I'm reasonably knowledgeable in fire protection I've been doing it for 30 years. I wouldn't have come up with that never in a million years I wouldn't walk through a facility and said well gosh You've got a problem here these back seals very well could be combustible And if you pull up a truck with faulty wiring you could start a fire I know about it now because it happened and it happened a couple of times So I don't like to get in that situation of saying well geez there's just nothing here. It's going to start a fire because weird things can and do happen All right, so let's talk about ammonia contamination so This one happened This is when I was actually directly involved with or at least it was an account that that I knew of it Something that I that I kind of touched so a maintenance technician was bleeding off some some liquid off the emoji and refrigeration system in the engine room and he used a Wrench to open up a valve a bleed valve to bleed off some Some water because you can't get some water that builds up in these systems When he did that he broke he broke the valve and now there was no way to shut it off and So eventually ammonia started to come out and the ammonia caused contamination this happened to be a warehouse full of ice cream I didn't know it at the time, but I know it now Ice cream because it has a very high fat content I can definitely speak to the fat content of ice cream But I didn't know that it was made it even more susceptible to ammonia contamination Because of this situation the entire warehouse full of ice cream was lost all of it So you think about something as benign as bleeding off the system and we lost an entire warehouse full of ice cream pretty significant situation All right, so this is this picture shows something called an evaporator so an evaporator is that Unit that you'll actually see in the freezer space That's where the cold ammonia is being run through basically fins and you see those fans those fans are blowing against that That's what's creating the cold that's going to refrigerate that space So very common for you to see these if you ever walk through a freezer now If you didn't know it before you can look up and say hey, there's an evaporator That's what they are. So in this case, this also happens to be ice cream and it's just coincidence This is what I was not involved with but in this one the evaporator had a leak a Small leak it was drip drip dripping ammonia very little drip It dripped three drops on of ammonia on to different pallets of ice cream Three drops is not a lot of ammonia, right? So what they did when they found this was is they tried to remove the top row of ice cream and they sent the rest Off to be sold turns out ammonia flavored ice cream was not a big hit Most people didn't really enjoy the taste as you can well imagine so they ended up having to scrap everything I know this has been a common thing But again, I would tell you if you have an ammonia leak if you have ammonia contamination And it's a any kind of food product or a pharmaceutical for that matter. You're losing. It's all gone You're not gonna salvage is it's not gonna happen I mean you might get a really weird situation where you're able to salvage something, but I wouldn't count Craig all right. Yes. I'm not surprised ammonia flavored ice cream was not a hit But we also have a question From Corey, is there any preferred packaging or racking that is more resistant to ammonia contamination than others I Would tell you the only thing that I would think that could be somewhat insusceptible to ammonia would be a It would have to be a sealed container I mean I would look at something like When we look at smoke damage to we think of things like a tin can right like a can of Campbell soup Or something like that you probably wouldn't put that in a freezer space But I would tell you this generally if it's a food product and the FDA comes in there and looks at it It's probably not going to matter I'm not aware of any containers that are going to really alleviate you from that and I would hate to get into the situation where I thought I was safe because I had X kind of container and then I get a Government inspector in there that after the fact that has to requalify this this product which is going to happen a lot of times They have no they have every incentive to say Scrap it all because it doesn't cost them anything right and they're protecting themselves So if I'm a government inspector and I were looking at this and I know there was ammonia contamination Why wouldn't I just say scrap it all? That's the safe route and doesn't cost me a penny. So I would tell you there is nothing that I know Yep, so we asked that question about the Refrigerated space whether it needs temperature monitoring if it's never going to be unoccupied for More than a told time. Well, here's the situation. I Didn't directly deal with this one of my co-workers did a corn dog manufacturing plant at a freezer full of corn dogs there was a $125 Val it's called a hot gas bypass valve Basically what this valve does is it allows some of the hot gas? It's not necessarily even that hot but some of the gas from the ammonia system back in it's basically like a defrost cycle If you have a defrost cycle on your refrigerator to keep the coils from frosting up. This is doing the exact same thing so what happened was They had a situation where they had whole times of 48 hours They didn't have any temperature alarms because oh, we're never gone for more than 48 hours if we lose Conditioning we'll be fine But what happened was they were gone for a day and the bypass valve failed and instead of the ammonia refrigeration system being a refrigeration system It actually ended up being a heater and it caused that freezer to heat up to 78 degrees in less than 24 hours I think about opening the door and what it would have smelled like 78 degree Corn dogs that have been sitting there for a while. I would think probably not the most pleasant smell in the world This is the picture of the valve So something as simple as a hundred and twenty five dollar valve caused a multi-million dollar loss So that is the reason right there. If no other reason that is the reason right there what you need temperature monitoring For every conditioned space freezer or refrigerated space you need it. It's got to be there All right, so I just wanted to go kind of over some some general takeaways Things that you might want to think about maybe as an underwriter Things you might want to ask If you're looking at a cold storage facility and this quite honestly, this could be for warehouse legal liability Or this could be straight proper. I don't look at it any different. So is the building sprinkler? Is it adequately sprinkler? What type of sprinkler system do we have? Remember what in my opinion the Cadillac of sprinkler systems for cold storage facilities is not a dry pipe system It's a double interlock reaction system. So now if you hear that double interlock reaction system, you're probably thinking well gosh These guys are that's belts and suspenders type of stuff which in risk engineering. We love we love belts and suspenders Are they doing ice plug investigations in my opinion if you're not doing an ice plug investigation annually on Your sprinkler system. I would consider the space to be non sprinkled Do I have ice plugs for sure I don't know if I do or don't because I'm not doing an investigation. But again, my thought process is always guilty until proven innocent Sorry, that's just the way it works for me. And that's the way it works for a lot of risk in humans Have they had any issues with corrosion or leaks in the sprinkler pipes? If I trip my sprinkler system because I've got some sprinkler some leaks and now my air compressor can no longer keep up and I Trip it that's bad Remember if I fill those sprinkler pipes with water there are three scenarios of fixing it and none of them are very desirable and From an insurance perspective the least desirable is I shut off the sprinkler system and I say my facility is now non sprinkler And again, I will say I've seen it seen it a couple of times If they're using insulated sandwich panels, are they listed or approved panels? We already talked about this in a little bit more detail. Sometimes this is very hard to figure out So I wish I had an easy answer that this is a dead giveaway that it's a listed or an approved panel It's not I will generally tell you this though if people have Like an FM or food panel most the time they know it and most the time they have the documentation Because probably not the first time they've been asked the question That's why if they say I don't know or they can't prove it. I kind of assume they don't Because in the situations where I run into where they do they're like, oh, yeah, I'll send you the cut sheet You All right, so what is being used as a refrigerant is it ammonia If it's ammonia, we've got a lot of potential concerns in place. I'll give you a Little hint here of something that I learned I actually remember when the person that was my mentor kind of trained me in this you ever see a facility and maybe you guys Don't actually visit facilities. Maybe you just look at them on Google Earth You ever look at a facility and you see a windsock you go to a you go to a warehouse a cold storage warehouse And there's a windsock outside if you don't know what a windsock is. It's something that typically would be used in An airport to show the direction of the wind They don't put wind at cold storage facilities because people are landing airplanes there They put windsocks up at cold storage facilities because they have ammonia and if there's an ammonia leak a large-scale ammonia leak They want to know which way to run Because they don't want to run the way the wind blowing because they don't want to run where the ammonia is going to go So really good indication that somebody's using ammonia if you see a windsock somewhere on the building And you might be able to pick that up from a Google Earth image But I would tell you if it's a freezer space of any size at all. They're using ammonia So if they're using ammonia, do they have ammonia detection? Do they have PSM? All kinds of things I could I'm sure I could spend a couple of hours or probably even a couple of days Teaching you about ammonia refrigeration obviously in 35 minutes don't have that same sort of luxury but a Lot of things to deal with but the big things you want to know is do they have PSM in place process safety management? Do they have ammonia detection in place? Those are the sort of the two big ones do condition spaces have temperature monitoring with alarm points that mean something and is that monitored 24-7 and Then also, is there a formal contingency plan in place to deal with loss of power refrigeration breakdowns All those different things that could potentially happen What are we going to do if we lose power and it's out for more than 24 hours? What's our plan? Better be documented somewhere. I want to written down. I don't want in somebody said I want a well-documented program And if my plan is that I'm going to move it to XYZ cold storage I want there to be an agreement in place with XYZ cold storage not just oh We called him last week, and they said they had space available Because next week they might not have space available So that's what I've got I think now we're going to open it up to questions We have we have some questions. Jacob Gomez has a few questions. Considering the major cost of ammonia damage, are there any safeguards installed to warn of ammonia leak? Unfortunately, the only safeguards to warn of an ammonia leak is ammonia detection. Ammonia detection will definitely let you know, but it's kind of too little, too late. The problem with ammonia is, even the smallest amount, as we looked at in that one loss example, three drips of ammonia on a pallet caused total loss of a product. There's nothing that is fast enough that is going to be able to warn us that quickly. It can warn us of a large-scale leak, but that's why we really want to eliminate, and that's one thing I didn't specifically talk about, but that's one of the reasons why we want to sort of reduce the exposure of ammonia being in that condition space where the product is as much as possible. A lot of times, we want to run our ammonia piping on the roof as opposed to in the spaces. The only thing in that space that has ammonia in it is the evaporator, nothing else. It's a great question, and the answer is no, there's really not. Okay. His follow-up question, Jacob's follow-up question, is also, what is the typical maintenance cycle of ammonia refrigeration units? Are they inspected monthly, yearly, and do they have visual or pressure tests? Great questions, and I'm going to tell you it's going to depend a little bit. There are different levels of maintenance that should be done on compressors, and it's going to stretch me a little bit on my technical knowledge because I'm not an equipment breakdown specialist. I'm a property specialist, but I will tell you that there are checks that should be done daily. There are going to be checks that should be done weekly, and there are going to be checks that should be done on a more, maybe even quarterly or semi-annually or annually. There's not necessarily a schedule for rebuilds or things like that. I do see engines or compressors that are out in the field and have been out in the field for a long, long time. The good news is most of the current ammonia compressors have diagnostics in them that tell you when something's wrong. A lot of those new systems are sort of self-diagnosing, and that's a really great thing. I wish I had a better answer for you, but it depends a little bit. There are definitely things that should be done every single day. If you have ammonia compressors, they should be being looked at every single day. This is also related to ammonia. What's the concern or reasoning for wanting or not wanting ammonia piping running outside? I don't know of a good reason to not want ammonia piping running outside. The reason why I like to see ammonia piping running outside is because if I have a leak in the ammonia piping and it's outside, it's probably not going to damage my product. It will go to vapor. As you saw in that one slide, there was sort of that vapor cloud. That was an extreme example, but it will vent to atmosphere and dilute very, very quickly. The nice thing about things being outside in general is once you release things to the outside space, the outside space, as you can think, is very, very large. Things will dissipate really quickly, and therefore, if I have a leak in ammonia piping and it's outside the building, it is just going to be safer from the contamination point of view. Inside the building, if I have a leak, then I run a much higher risk of contamination. I've never heard a good argument to leave the piping inside the building. Okay. Thank you. We have another question for you, Craig, but I also wanted to know if Michelle Sipple is ready to come back on because we do have some questions for her as well. Hi, Michelle. Here's another one for you, Craig. Can you comment on controlled atmosphere warehouse exposures? This is from Michelle Adal. When you say controlled atmosphere, I guess I'm not 100 percent sure. Are you talking about reduced oxygen? Are we talking about conditioned space as far as temperature goes? Like apple growing, that kind of stuff? That's what I'm wondering. We're actually controlling the atmosphere as far as the amount of oxygen that's in there. You're trying to remove oxygen, so things will – I think in the case of like bananas, for instance, they actually pipe in gas to ripen them quicker. We can have Michelle open up her line if she would like to do that or if she wants to comment further in the Q&A section. This is Michelle Adal. Let me see if I can find her. We can have her open up her line. Michelle, if you'd like to open up your line, you can – it's open now. You can unmute from your side and ask your question. Controlled atmosphere warehouses, they remove the oxygen from the rooms and seal the rooms. I was just wondering if you had any comments on that. One of the exposures that I think people like the agents will say, oh, there's no oxygen in there, so you can't have a fire, but the rooms aren't always occupied. When they aren't occupied, there obviously is oxygen in there. I was just wondering from a loss control standpoint. No, that's a great question. After I kind of started talking, I wondered if that's maybe what you're referring to. I am familiar with those types of systems. In case anyone's not, what the theory is here is that in order for something to burn, it needs a fuel source, it needs oxygen, and it needs an ignition source. If I remove oxygen from the space, then in theory, I can't have a fire. It's commonly used for very hazardous things. You might hear of something like a nitrogen blanket. What they kind of come up with this idea of, if I can remove the oxygen from an entire warehouse, then I can't have a fire in the warehouse. Then I don't need a sprinkler system. Mainly, my sprinkler system doesn't have to be very robust. I think it's caught on more in Europe, but it has started to move into the United States. Here's what I – I've never actually run across one firsthand, but here's what I know about them. First of all, maintaining an oxygen-deficient environment is very, very expensive and very, very difficult to do. Generally, when people have done it, they've failed at it. A lot of times, they're not even getting it to the point where – I'm going to go a little bit off the top of my head. I believe that you need at least 12 percent, maybe, oxygen to support combustion. They don't get it that low. They're getting it maybe around 15 percent. You're not totally preventing it. The idea would just be that the fire is a little less hazardous and that I can put a less robust sprinkler system in it. I have no idea to tell you how much less robust of a sprinkler system you would need. What I would tell you is they're problematic. Other thing I've heard is a lot of companies that kind of start this and they go, oh, we're going to have this oxygen-controlled warehouse. After a year or two, they give up and say, it's too expensive. We couldn't maintain the atmosphere. We give up. So, I would be very, very leery of them. I mean, maybe the technology will get better. But from what I know right now, it's sort of a great – I don't know if it's a great idea. It's an idea that just in theory doesn't work that well. Thank you. Okay. We have a question for Michelle. This is from Julie Richard. How can we be sure that warehouse legal liability limit is a true reflection of the exposure? Yeah, I mean, that's a great question. And really, what you need to do is determine – you know, you really got to look at the warehouse contract, right? The warehouse receipt. If it's based on pounds, you need to know how many pounds are being stored in the warehouse, right? And then you can determine based on whatever it is. If it's 10 cents or if it's 20 cents, you can determine what the limit should be, what their exposure is. I mean, that's what you should be rating off of. It tends to be very specialized and there tend to be some brokers that really know what they're doing. And as I'm sure all of you know, there are a lot of them that don't know what they're doing. So, it's really incumbent upon us to really look at that and figure that out. Hopefully, that answers the question. But you need a lot of information in order to figure that out. You need to know what kind of liability they're assuming and you need to know all of the customers within that warehouse. Thank you. We have a question from John Quaminga. How do you handle situations where their warehouse receipt is broader than the insurance contract? Well, your contract is always going to be what dictates what coverage is paid, right? Or what claims will be paid. So, you may not want to cover certain things within their contract. I just think it's a matter of being very transparent. But your policy will dictate how your claims folks will handle that. Are there not chemical test strips that can be placed on condensers to detect ammonia leaks very early by changing color? This is from David Nelson. He believes that they had some of those when he worked in a lab with the fume hood. They very well could. But I mean, if you think about where these are, they're up at the ceiling. So, if you had a test strip up there, how are you going to see it, for one? And then, how are you going to respond to it? So, I would tell you, yeah, in theory, I'm sure there are test strips. But I don't know how you could use one effectively that would have some sort of visual indication to it. Again, ammonia detectors are going to be able to pick stuff up pretty early in the process, maybe as low as one part per million. If we have those close, we're probably going to pick it up pretty early. But I think trying to catch an ammonia leak. And then, the other part of it is you not just have to detect the leak. We have to do something to stop that leak, right? So, even if I detect the leak really, really early, it doesn't mean I stopped it. It just means I know it's there. So, how much more time is it going to take for me to stop that, you know, if it takes another 30 seconds, which isn't very much time at all? That could be all the time it needs for me to lose everything. Thank you. And this question is from Katie Kazemi. Do any contingency plans involve arrangements with refrigerated trucking companies? How good are these for loss of power situations? Great question, and one I actually, I thought about it when I was talking, but I probably should have mentioned it. So, there are definitely customers that I've dealt with where their sort of contingency plan is either they have their own reefers or refrigerated trucks, or they're using somebody else's. And that's a viable option, absolutely, because they're independent of power, right? So, if I lost power, these things are being run off the engine of the tractor trailer or the vehicle itself. So, it is a great option. The problem with it is, is do I have enough refrigerated trailers to put all of my product in those spaces? So, if you do, then that's a great potential solution, absolutely. And I've seen it done. Grocery retailers, prime example, they have a lot of refrigerated trucks because they're delivering product to their stores. So, a lot of times their contingency plan is we're going to bring all our refrigerated trucks to our main warehouse, and we're going to put all our product in there. Very doable. Thank you. We have a question from Andy Henderson. Can you describe the components of state-of-the-art temperature monitoring systems? So, generally, a state-of-the-art temperature monitoring system is going to have – I don't know that they've changed that much through the years, necessarily. You're going to have a sensor of some sort, and then that sensor is generally going to be wired to a device, a monitoring device, and then that monitoring device is going to have the capability of contacting people. That could be through a central station monitoring company, the same way your fire alarms would be monitored. So, you might have your sprinkler system alarms and your cold – your temperature alarms on the same circuits. So, my UL-listed central station monitoring company is monitoring for temperature. In my opinion, that's the preferred method because I know that there's always going to be someone there, right? There are other situations where they've got an internal system where it's going to call the head of maintenance, it's going to call maybe the operations manager, and maybe two or three other people. Those are okay. The problem with that is how do I know those people are – if they're asleep, how do I know they're going to wake up? How do I know they're not having a couple of beers on a Saturday night? That sort of thing. So, they have a little bit of an inherent problem. The more people on the call tree, and if you have somebody that is designated as an on-call person, then that makes it better. But that's essentially – the main components of those types of systems is just a monitor, and you're going to not just want to put one monitor in. You're going to want to put multiple monitors in. Generally, the people that sell these products would give you an idea of how many and where, but that would be the basics of how they work. All right. Thank you both, Michelle and Craig, for an excellent presentation today. You're welcome. I enjoyed it. Thank you. It was very informative. Thank you also to our attendees for your participation and your questions. And so, now we're ready for the Amazon gift cards. And our two winners are Katie Kazemi and Jacob Gomez. So, Katie Kazemi and Jacob Gomez, you will receive Amazon gift cards. I'll email them to you after the webinar today. Congratulations to you both, and thank you all for your participation in the Q&A. Yeah, great questions all the way around. I really love it when people ask a lot of questions. So, I appreciate it from my end. Everyone will receive a link to an electronic survey. Your feedback is appreciated. We want to know what worked well and what you think are opportunities for growth for IMUA and where we can improve. To our presenters, again, thank you for a fantastic presentation. We really appreciate all the time and effort that you put into developing the content today. And thanks to Ali and Eileen for coordinating the presentation with our presenters. This ends today's webinar. Have a great rest of the day.

Warehouse Legal Liability

Cold Storage Warehouses

Legal Liabilities

Michelle Sipple

Craig Tuakala

Underwriting Factors

Risk Engineering

Ammonia Hazards

Ammonia Leak Prevention

Refrigerants

Contingency Planning

Temperature Monitoring Systems

Refrigerated Trucking Companies