The burning season: Are you covered?

The top causes of loss by total value in SA are fire and explosion. Discovery Business Insurance’s Lana Ross highlights measures businesses can take, and additional solutions it has introduced – including private firefighting services.
Being insured against fire damage is the first, but not the only step to take. Image: Bloomberg

The worst has happened: you’ve had to watch your home and its contents go up in flames.

Simply thinking about this scenario would make most South Africans break out in a cold sweat. The cost of replacing what is, for most people, their single biggest asset, often with a mortgage still to be repaid to the bank, is tremendous – never mind the emotional loss of sentimental items and a safe space for you and your family.

According to global insurer Allianz’s 2022 Global Claims Review Report, the top causes of loss by total value in South Africa are fire and explosion at 65%.

If you look at the detail in its report, this seems to be the top cause of loss by total value globally, barring in Brazil (shipping incidents), Australia (negligence and misadvice) and the US (natural catastrophes).

Source: Allianz

It is obviously in the best financial interest of both the individual and their insurer for fires to be prevented, or to be put out as quickly and as efficiently as possible when they do happen.

On the rise

“Fires generate the most expensive losses for South African businesses … over the past five years,” the report reads.

Lana Ross, Chief Operating Officer at Discovery Business Insurance, confirms that its claims statistics also show that fire incidents have increased.

“If you look at statistics from the Fire Protection Association of South Africa, you will see that there has been a 68% increase in the number of reported fires between 2011 and 2020 in the country,” Ross says.

The statistics show that the number of incidents jumps during the drier months in any area – by up to 60%. In South Africa, this means you are effectively looking at two fire seasons: one in the Western Cape just before the winter rains start, and another in the balance of the country that experiences summer rain.

Discovery Insure’s claims data statistics also provide an interesting view on the main reasons for fires at business premises.

Ross says that “poor housekeeping” is often the main culprit. For example, for clients without electrical certificates in place or where the premises’ wiring may not be in the best shape.

“We also find that often, in factories or storehouses, the storage of the items isn’t done properly. You would have items stacked high with a fluorescent light right above, leading to a fire. We also see that when there is a fire, the business’s employees usually have not received proper training in firefighting procedures.”

Alternative solutions

Unfortunately, with infrastructure challenges and firefighting equipment shortages at many municipalities, fires sometimes last longer than they should – even when reported timeously. In Johannesburg, for example, it is reported that the number of firefighting vehicles available is not adequate to cover the city’s expansive sprawl.

In line with the company’s approach of being a “force for social good” Ross states that Discovery Insure looked at the trends of rising fire incidents, both for personal and business clients, and started to investigate a way to intervene or assist clients in the case of a fire.

In June the company announced the launch of Fire Force, the first-to-market partnership between Discovery Insure and Advanced Emergency Management Services (Advanced EMS) subsidiary, Fire Ops SA.

The initiative is currently only operational in Johannesburg, where (according to Discovery) a fire breaks out every six hours.

Ross says that they will evaluate the success and then drive the programme, and its possible expansion, from there.

The goal is to get help to the site faster, as immediate assistance will make all the difference in reducing the severity of the damage.

Discovery Insure and Discovery Business Insurance clients will be able to call the Discovery Emergency Services number in case of a fire, where an operator will feed the information to the Fire Ops SA team.

The client will not have to pay a call-out fee or incur any additional costs not covered through the insurance policy and will receive the help required – whether through a rapid response vehicle or a large-scale fire truck.

Additional interventions include looking at ultra-high-pressure systems installed in fire trucks that form part of the programme, to assist in areas where there are water shortages or no working fire hydrants.

“We are also implementing preventative solutions like training our clients in firefighting protocol, as well as risk mitigation strategies that could prevent fire incidents,” says Ross.

Be prepared

Being insured against fire damage is the first, but not the only step to take.

Senior associate at Adams and Adams law firm Mtho Maphumulo cautions fire insurance policyholders to make sure they comply with the policy wording once they have fire insurance in place.

“Once valid cover is in place, it is critical to satisfy all the conditions as per the policy wording. In business/property fire insurance policies, it is common to have conditions such as installation of fire extinguishers, a fire alarm system, fire insulation materials etc.,” he writes on the company website.

Even if these mitigating measures are in place, the insured needs to keep all necessary records once a fire has materialised, the article reads.

Discovery, being known for rewarding positive and preventative behaviour, is not yet linking fire prevention measures to, for example, a lower premium, says Ross.

“In terms of the shared-value model, we could look at how we can do that, once it is tested and we see an improvement in risk. Ultimately the basis of our shared-value proposition is how we can share any resulting benefits with the client.”

Brought to you by Discovery Insure.

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