Much of Australia has experienced heatwave conditions this week with temperatures in several states reaching the mid-40s Celsius. The Bureau of Meteorology (BOM) has warned that the hot, dry and windy conditions are causing extreme fire dangers.
Addressing these risks is an urgent task for commercial properties. Insurance industry stakeholders say brokers can play an important role educating their property-owning clients about what actions they need to take.
Mike Hunneyball (pictured above) is operations chief engineer for FM, the multinational commercial property insurer.
“Climate uncertainty is fuelling Australia’s bushfire threat,” said Melbourne-based Hunneyball in a media release. “The combination of summer’s heat, dry conditions and reduced staffing levels leave properties vulnerable to bushfires and other-climate related risk.”
The climate risk expert said it is “imperative” for businesses to be proactive addressing the risks that bushfires pose to their operations.
Insurance Business asked Hunneyball how bad is the bushfire risk looking?
“Climate science continues to show climate change is making bushfire seasons worse,” he said. “Research by CSIRO and the BOM highlights that increased temperatures across Australia are leading to more intense and frequent fires.”
Hunneyball said a thorough bushfire risk assessment is the first “crucial topic” for brokers to raise with property owning clients.
“This involves examining the business's locations and critical assets, considering factors like proximity to bushland and how vulnerable properties are, based on building design, construction materials used and fire protection systems in place,” he said.
Hunneyball said FM then advises its clients, including brokers, to focus on the available resources and support to create a bushfire emergency response plan.
“This includes consulting with the local fire brigade to determine optimal access and egress routes for both staff evacuation and firefighting efforts,” he said.
The operations chief engineer said it’s “paramount” to understand how the fire brigade will access the property and ensure clear, safe exit paths.
“In the assessment it’s important to map out resources, such as water sources, that could be needed for the fire brigade,” said Hunneyball.
He said knowing if the fire brigade needs to rely on external water sources can also be crucial for effective fire management.
As insurance rates for climate risks of all kinds continue to rise steeply, industry stakeholders say a proactive approach to dealing with fire risks can bring those premiums down.
“From an insurance perspective, if businesses can show they are a low risk, this affords them more favourable insurance terms and conditions and potentially lower premiums,” said Hunneyball. “So, there are incentives from a financial perspective.”
When insurers consider a property a “good risk”, he said it means the business has adopted good mitigation plans and protection measures. Hunneyball said this includes using fire resistant building materials or installing fire protection systems such as automatic sprinklers.
Beyond the property itself, fire risk protection for a commercial business also requires risk management for broader operations.
Hunneyball said this includes business interruption, downtime and potential loss of clients from service disruptions.
IB suggested that December is a particularly busy time and engaging a client in a bushfire risk conversation might be tricky for some brokers. Where should they start?
“Our advice to brokers is to firstly be informed of your client’s bushfire risks – particularly those in more rural locations or near a lot of vegetation,” he said. “Start by understanding the client's specific bushfire risk profile, then tailor your advice and recommendations of appropriate resources.”
Hunneyball said brokers should also be proactively reviewing client’s policies, ensuring they have up-to-date and adequate coverage.
“Ensure clients know who to contact and how to access support from both the broker and insurer in the event of any loss,” he said. “This proactive approach strengthens the client-broker relationship and ensures clients are well-prepared should a bushfire occur.”
Hunneyball said that Australian business do take bushfire risks seriously, particularly since the 2019-20 Black Summer.
“We see this with our clients, who are increasingly implementing emergency response plans and incorporating bushfire mitigation into their property design,” he said.
Hunneyball said his firm is seeing widespread adoption of these practices.
“This includes essential steps like regularly cleaning gutters, removing flammable vegetation around buildings and installing mesh screens to prevent any embers getting into a building,” he said. “These preventative actions are proving highly effective in minimising property damage and demonstrate a growing commitment to bushfire preparedness within the business community.”
The CSIRO and BOM’s State of the Climate 2024 report, released in October, added more evidence to the familiar finding that Australia’s ongoing warming climate “will lead to more extreme heat events.”
Are you an insurance broker? What’s the first thing you recommend commercial property owners do to improve their fire risk preparation? Please tell us below.
