Inside Logistics

Insurer warns of risks with closed facilities

Maintaining good fire safety practices is key when buildings are not occupied


April 7, 2020
by

NEW YORK – Shutting down operations and facilities due to the pandemic brings its own set of risks. Improper action or negligence when decommissioning buildings and production facilities can actually increase the likelihood of fire and other hazards.

In a new publication, “Coronavirus: Safety Measures For Businesses Forced To Temporarily Close Their Premises”, Allianz Global Corporate & Specialty (AGCS), provides an overview of general security and prevention measures to help avoid physical damage, such as regular checks of fire protection systems and the safe storage of flammable materials and liquids if premises have to be shutdown.

“We already see a number of losses that occur on holidays or weekends when employees are not largely present on sites or premises,” says Thomas Varney, regional manager for the Americas at Allianz Risk Consulting,

“The production and operating shutdowns currently being caused by the coronavirus pandemic can also bring increasing hazards for businesses.”

Among the industries most affected are automotive manufacturers and suppliers, airlines, airport operators, mechanical and plant engineering firms, the hotel industry and many other large and small production and service companies.

For businesses, the growing number of restrictions imposed by public authorities means that offices, factories and other sites may remain unused or unattended for a longer period of time than usual, as they are ordered to close.

Some of the measures suggested include reducing quantities of combustible materials located inside buildings as much as possible. Combustible materials may include raw and finished goods, packaging, pallets, waste, dust, lint, oil, flammable/combustible liquids, and so on.

“The potential damage caused by fire or as a result of inadequate maintenance remains, or even increases, when operations are shutdown. There are specific measures for loss prevention that can be followed in order to prevent damage during the shutdown of operational facilities as much as possible,” Varney says.

If possible, regular inspections and tests of fire protection systems should be continued, as these can greatly reduce the effects of a fire. An AGCS analysis of loss events in the insurance industry shows that fires account for almost a quarter (24 percent) of the value of all insured events in industrial insurance over a period of five years. Fires have caused insurance losses worth more than 14 billion euros from around 9,500 claims.

AGCS Risk Consultants focus on four main areas of loss prevention measures in the publication: reducing the risk of fire, safe storage of flammable materials and liquids, compliance with utility and services guidelines, and the use of best practices in building safety and maintenance.

The complete overview of possible actions for companies that are forced to temporarily close buildings, factories and facilities due to the coronavirus is available here.