Fire is biggest risk as facilities prepare to restart after lockdown

Left unchecked during the pandemic lockdown, the condition of electrical equipment and installations is particularly prone to fire risks.  Fires, machinery breakdowns and faulty workmanship/maintenance are among the most expensive causes of insurance claims.

According to Allianz Global Corporate & Specialty (AGCS), site security, inspections and dedicated loss prevention measures are recommended to ensure a successful and safe reopening after shutdown.  

The coronavirus pandemic has impacted global businesses and their employees, closing many operations, albeit temporarily.  With businesses in many countries now preparing to reopen after a period of inactivity, it is important that they remain vigilant about the risk environment in order to identify unknown problems which might have occurred during closure, as well as to mitigate losses that might occur as a result of reopening.

“Restoring operations at a facility that was once idle or vacant presents another set of loss prevention challenges, particularly to manufacturing plants with hazardous equipment or processes,” explains Stephen Clark, Global Technical & Expertise Manager for Property Risk Consulting at AGCS. 

“For example, fuel-fired equipment may need to be restarted, which creates an additional risk of fires and explosions.  There may be a reduction in workforce available to operate and maintain production equipment safely or to respond to emergencies.  Also, lapses in maintenance of buildings, equipment and fire protection systems may create hazardous conditions.”

Businesses should pay particular attention to the condition of electrical equipment and installations, as around 20% to 30% of AGCS fire claims are related to these.  Insurers have also seen a number of claims from fires resulting from technical defects or operational error after machinery has been restarted or cleaned in preparation for reopening of facilities, which has then caused further disruption to operations.

AGCS analysis of insurance industry claims shows that fires already account for almost a quarter (24%) of the value of all business insurance claims over a five-year period, the major cause of losses.  Faulty workmanship and maintenance (8%) and machinery damage (5%) rank as the 3rd and 7th top causes of claims respectively.

In addition, facilities introducing alcohol-based (flammable) disinfectants, such as hand sanitizers, should implement proper fire safety precautions.  This should include keeping them away from ignition sources, such as open flames, encouraging employees to rub their hands dry to allow vapors to safely dissipate, disposing of all waste rags in approved, normally closed containers, and storing flammables in designated cutoff rooms or approved cabinets.

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