Fighting fires
Exposure to fire loss is a major risk that does not receive the attention it deserves, considering the devastating consequences it can have on a business. Proactive advisors can play an important role in protecting their clients in this respect.
The causes of fire worldwide, with percentages varying according to geographical and other factors in different countries, are:
* External factors such as earth quakes, floods and other disasters (10 - 20%)
* Equipment failure due to poor design and lack of maintenance (10 - 20%)
* Human factors such as operator error and risk management deficiencies (70 - 85%)
The most common ignition sources
According to the Fire Protection Association of South Africa, the eight most frequent ignition sources of fire are:
1 direct flame or open fire
2 electrical faults
3 malicious or intentional acts
4 arson
5 smoking
6 hot work such as welding, grinding and cutting
7 friction or overheating
8 static electricity
It is estimated that in 85% of incidents in South Africa, human error is the cause behind the ignition.
South African situation
At least 70% of losses to business in South Africa are caused by fire – mainly due to human error accelerated by poor building design and lack of adherence to legislation.
"In South Africa we estimate that human error is responsible for 85% of fires in business with poor building design being another important factor caused by various solvable deficiencies," says Nash Omar, CEO of Etana Insurance.
"Financial advisors and intermediaries can play a leadership role in addressing this issue. Exceptional intermediaries are taking an active role in the management and development of their clients' businesses, becoming part of the decision making team when it comes to identifying financial risk, including exposure to fire loss."
Going beyond the obvious
Apart from the obvious careful attention to risk management in all its forms with regard to insurance, financial advisors and intermediaries should be proactive in advising their clients when they are in the process of renting, building or buying premises.
According to Etana's Head of Risk Management, Marcel Wood, "Long before a company signs a lease or seeks approval for plans, effective fire protection needs to be professionally assessed.
This has to be measured in line with their specific type of activity. For instance, the risk in water bottling plants or warehouses will be very different from the much higher risk of a saw mill or furniture warehouse.
"Because one of the major problems in our country is the lack of experience, expertise and funding surrounding the area of monitoring and adherence to legislation regarding new building plans – as well as suitable preventative systems in existing ones – the selection of suitable premises needs to include professional fire risk assessment," Wood says.
Avoiding excessive expenses
The typical kinds of big expenditures that can follow leasing, purchasing or building without prior professional assessment of fire risks are:
* sprinkler installation
* fire detection systems
* fire hydrant installation and other portable fire equipment
* gas suppression systems in industries where water dousing is not appropriate
* fire doors
* fire dampers
* bunding walls
"These are high cost installations that can affect the cash flow of any business," says Wood.
Proactive intermediaries can position themselves as an indispensible part of the executive management team of a company by providing the advice and guidance that can not only avoid huge fire losses, but also save a company money in terms of professional assessment of fire risks before a new building is acquired or leased.
