SYSTEMS TO CUT YOUR FIRE INSURANCE COSTS
| DOI | https://doi.org/10.1108/eb057151 |
| Published date | 01 October 1980 |
| Pages | 16-16 |
| Date | 01 October 1980 |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
SYSTEMS TO CUT YOUR
FIRE INSURANCE COSTS
OVER £355 million went up in
flames in 1979 in Great Britain
- and that was just direct dam-
age;
many more millions of
pounds went in lost produc-
tion, profits and exports.
Clearly, industry needs to be
fully protected against these
losses by insurance but they
should also take every possible
precaution to avoid a fire and
minimise loss if, despite pre-
cautions, a fire breaks out.
Fire insurance must be regu-
larly reviewed. If the sum
insured is below the rebuilding
cost of your buildings and the
value of your contents you will
find that the lower insurance
will mean that if you have a
claim, only a proportionate
part of the loss will be payable.
For example, sum insured
£100,000 with replacement
value at £150,000 will mean
that recovery is restricted to
two thirds of the actual loss. It
is therefore vital to keep the
value shown in your policies up
to date.
No business man should be
without consequential loss, or
loss of income insurance. A
suitably arranged insurance
will enable him to retain essen-
tial staff and get back into pro-
duction as oon as possible after
fire,
without suffering a loss of
income. You can also insure
against loss following a fire at
customers or suppliers prem-
ises or a breakdown of gas,
electricity or water supplies.
If you are making any altera-
tions to your premises or mov-
ing into new buildings, ask your
insurance company's surveyor
to advise you on fire precau-
tions before you start. His sug-
gestions could save you the cost
of higher premiums or expen-
sive alterations later.
Substantial savings on fire
and consequential loss insur-
ance premiums are available to
manufacturers if approved fire
protection systems are instal-
led. These can amount to 70%
or more. The best installation
depends on the hazards in the
individual building, but sprink-
lers are especially valued
because through their automa-
tic action they start immedi-
ately to attack the fire and pre-
vent its spread. Many systems
also have a direct alarm link
with local fire brigades.
In addition to the premium
discounts allowed by insurers
following the installation of
approved fire protection
equipment, there is also a sys-
tem of depreciation allowances
which permit a rapid write-off
of investments in machinery
and plants.
The need for damage control
planning is borne out by the
practical experience of well
managed firms, which recog-
nise that the destruction of
organisation and the loss of
production caused by fire can
be controlled to a large extent
by proper planning in advance.
Firms should take into
account not only fire protec-
tion and prevention, but also
damage reduction measures.
Particularly important con-
centrations of value should be
identified and noted to the fire
brigade, with the situations of
highly flammable materials.
All efficient firms carry out
regular fire drills to ensure that
employees know what to do if a
fire breaks out. Works fire
brigades have a particularly
important part to play in dam-
age reduction. They know the
nature and the location of key
installations and valuable con-
centrations of equipment or
irreplacable information such
as records, working drawings
and research reports.
In the event of fire, the
works brigades can make their
most valuable contribution by
protecting the key installations
and reducing damage gener-
ally, while the fire brigade
fights the fire. It is vital that this
activity should be pre-planned.
All firms, whether they have
works brigades or not, should
make plans for safe guarding
key installations. These plans
should be incorporated into the
regular fire drills.
Planning for the aftermath of
a serious fire is perhaps the
most important part of the
damage control efforts. Even
the best insurance arrange-
ments may not fully compen-
sate for the long-term effects of
fire - dissatisfied customers,
worried shareholders, broken
contracts and the cost of the
long, slow, haul back to normal
productivity.
It makes sense to plan for
post-fire rehabilitation in
advance. A great deal of time
and money can be saved if a
draft organisation has been
drawn up, designating personal
responsibilities. Following a
serious fire the people involved
would form a damage control
team made to put the pre-
arranged plans into effect
immediately. Their job would
be to co-ordinate efforts to
speed up recovery, so that the
firm can get back into produc-
tion with the least possible
delay and loss of momentum.
The team should meet regu-
larly to keep the firms post-fire
plans up to date. It is particu-
larly necessary for those in
charge of providing alternative
arrangements, such as standby
plant and accommodation. The
damage control team could
include the company's works,
purchasing, sales, personnel
and insurance managers, the
fire prevention officer and the
company secretary.
Specialist advice on damage
control planning can be
obtained from fire brigades,
insurers, the Fire Protection
Association and the Salvage
Corps. in London, Liverpool
and Glasgow. A technical
leaf-
let "Protection Against the
Aftermath of Fire" has been
specially prepared by the Fire
Protection Association. Copies
are obtainable free of charge
from the FPA at Aldermary
House, Queen Street, London
EC4.
Information about other fire
prevention problems is avail-
able from the Fire Protection
Association at the same
address, and if you have any
insurance problems, call your
insurer or your broker without
delay. It is particularly impor-
tant to consult your insurance
company before making altera-
tions to premises or the use of
premises, as their advice can
save you money as well as
ensure you have the full insur-
ance you need. ■
PROFESSIONAL PRIDE
HERE'S an example of profes-
sional pride that would almost
be called unethical
in
other pro-
fessions. It was voiced by
Wil-
liam Hyde, President of the
19,000-strong Institute of Cost
and Management Accoun-
tants,
who announced: "There
are two kinds of accountant,
the regulator and the
accelerator. We are the
accelerators. It is our job to
maximise profits. Our
judg-
ment and the information we
give to management are
cru-
cial today in halting the present
appalling decline in industrial
production, starting the climb
back to greater productivity,
and halting the growing threat
of international competition."
Mr Hyde, addressing dele-
gates at the opening of a two-
day conference in Dublin on
management accounting
in
the
eighties,
said:
"The challenge
is great as we enter this daunt-
ing decade as the difficulty of
our task grows, so too does its
importance. The regulators,
that is the auditors, also face
an ever-more difficult and at
the same time important task.
Both we and they will need to
react with accuracy and speed
to growing international legis-
lation,
especially within the
EEC,
and increasingly from
such bodies as the United
Nations. At the same time we
must both determine how far
regulation should go, and this
is important to us as manage-
ment accountants, concerned
as we are with producing the
accounts.
"The growing recognition of
the management accountant
as a key figure in the manage-
ment team is underlined by the
rapid and continuing growth of
their employment in industry
and in nearly every sector of
the economy. This is so not
only in Britain but across the
world.
In Britain the employ-
ment of management accoun-
tants has risen by 10 per cent
in the two years from 1978.
Overseas it has risen by 12 per
cent. Only in Britain's public
sector has the rate of increase
been slow, a sector where
there is clearly great need to
improve our penetration.
"Though the future structure
of the accounting profession
as a whole is obscure",
con-
cluded Mr Hyde, "one thing is
certain,
and that is that there
will be a continuing and grow-
ing need for the management
accountant."
Roy Walton
16 INDUSTRIAL MANAGEMENT + DATA SYSTEMS
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