
Risk management (and linked to that, mitigation) is increasingly becoming an area of concern for brokers, insurers and reinsurers as recent losses have resulted in large insurance claims. With the many issues facing the fire and insurance industries at present (including a lack of water in the Western Cape) it is crucial that all stakeholders remain committed to ensuring best practices are followed when it comes to the design and installation of sprinkler systems.
Not only do fires cause catastrophic damage to property and interrupt business operations, when lives are lost it is often due to negligence. Investigations have shown that most fires would have been contained if proper building codes and fire standards had been followed but sadly this is not the norm in today’s economic environment.
The latest fire loss statistics have been published in the Fire Protection Association of South Africa (FPASA) magazine in June this year. They reflect the losses in 2016 for insurance pay-outs. All statistics are two years out of date and, considering the massive fire losses that made news headlines in 2017, we expect the next set of statistics to increase proportionately.
The 2016 statistics for the country indicate the following:
- There were 41 873 recorded fires, or around 115 fires every day on average
- The recorded insurance pay-outs came to just under R10 million per day
- 59% of the financial losses were residential and 20% commercial and industrial
- The cost of residential losses increased by over R650 million, a 55% increase on the previous year
It sounds terrifying! How on earth is the insurance industry coping with such massive losses? The problem is, those statistic do not represent the reality of how much trouble South Africa is really in. When looking at the actual losses, the statistics seem like a wonderful illusion: Only 54 out of 210 fire departments submitted losses to the FPASA.
Combined with the lack of complete information, the fire industry at large at large has faced a decline in professionalism and knowledge retention over the past half a century. What this translates to in today’s environment is a decreased ability for fire professionals to serve the industries they operate in, namely construction, insurance and (obviously) fire.
As there are more and more fires reportedly daily in the news, it is imperative that all industries work together to ensure we prevent these catastrophes from occurring in the future. Everyone has a role to play in ensuring risk management is properly conducted to protect buildings, people and our economy.
For more information contact:
Natasha Goring Managing Director ASIB
Natasha@asib.co.za