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Fire damage can result in significant business losses and a long uphill battle to recovery, however, according to Vero, many businesses still don’t cover the simplest bases when it comes to fire risks.
According to Vero’s customer risk solutions manager Stephen Henkin, the insurer visits around 3,000 commercial premises annually to offer advice on how businesses can best protect themselves against losses. An estimated 80% of commercial fires are extinguished before firefighters reach the scene, and Henkin says that, according to Fire Emergency New Zealand statistics, the use of fire extinguishers is saving New Zealand about $48.2 million dollars in losses per year.
Despite these facts, a significant chunk of businesses do not keep fire extinguishers on their premises, and face a myriad of hazards that could easily be avoided.
“Some building owners defer fire risk management entirely to their tenants and expect that they’ll do the right thing, which is not always the case,” Henkin said.
“Other businesses believe their insurance policy is the entirety of their risk management programme and they don’t need to take any further steps. There are also situations where emerging risks appear unexpectedly and take people by surprise, even if they’d been managing their risks effectively.”
According to Henkin, brokers and insurers are vital in helping businesses assess their fire risks and providing specialist advice on risk minimisation, especially to smaller businesses that may have resource constraints.
“Fire risks are essentially very simple – you have fuel sources, and you have ignition sources,” he explained. “Good management practices are based around ensuring that the two do not come together.
“Preventative measures vary widely from business to business –an office block, for example, would be a relatively benign risk, but if you have a carpentry workshop where there are significant amounts of combustible materials, the risks are far greater. Brokers and insurers have a combined role to play in assisting customers, and can offer specialist advice with regards to the risks of a particular industry.”
At the end of the day, Henkin says, insurance can only do so much when a business suffers a fire.
Regaining market share after sustaining damage is tough, and the most effective defence against loss is reducing any negative outcomes from the get-go. Things like insurer visits to customer premises can identify new and emerging risks, and apply a vast base of accumulated risk management knowledge and claims knowledge to help prevent any potential future damage.
“The insurer-broker relationship is very much a partnership in this regard, and we can each bring a lot of knowledge to the table,” said Henkin.
“We really encourage brokers to talk to their customers about their fire risk and simple measures such as installing and maintaining fire extinguishers, or arranging a visit from their insurer if they think it’s necessary for their client.
“Some businesses think we’re going to come in and give them a list of expensive things to do, but there are often very economical and low-cost improvements that can be made. The ultimate aim for us is to make the customer’s business more resilient and able to survive a loss, or, even better, to prevent that loss from happening in the first place.”
