EVERY year local authorities issue fire certificates to commercial property owners.
The certificate is issued on the premise that the authority has inspected the building and that the building has sufficient firefighting equipment in place such as fire extinguishers, fire detectors, horse reels, sprinklers etcetera.
Whether the physical inspection is actually done is not the point of discussion today.
However even where a building has sufficient firefighting equipment when unfortunate eventualities such as fire or explosions occur at a large scale many times such equipment fails to control the fire.
On the occurrence of major fires we rely on the fire brigade services of which their service also leaves much to be desired.
In some places fire brigade services are non-existent while in others they are insufficient as many reality can testify, for example a few months ago a vehicle was reduced to ashes a few meters from the Lusaka fire brigade.
This is not meant to undermine the significance of such services which are also a critical factor to insurers when evaluating the fire risk.
It, therefore, means that by issuing fire certificates or having fire brigades in place the risk of fire is not eliminated, it is simply mitigated should it occur at a manageable magnitude.
The ultimate protection remains with insurance in place which comes through to compensate the insured for the losses suffered.
When fire sweeps through a building the effects go beyond the owner.
The many employees who have many families they look after will be affected such that the ripple effects span across many.
Let’s the case of Swap Spinning Mills fire in Ndola a few years ago.
The owners suffered substantial losses amounting to millions of kwacha.
Employees had to stop going for work because there was no production going on.
It is common sense that in such a case should the employer will not continue paying salaries because there is no production.
It meant that the jobs of the hundreds of employees were affected.
They lost their sources of income resulting into many other challenges such as sending children to school and just making ends meet.
In addition those relatives of such employees in rural areas who depended on their relatives to send money for their upkeep or school fees for their relatives could no longer afford to send the much needed support.
The enterprise also stops paying the taxes associated with production such as income tax, including pay as you earn. The contribution to the government coffers dwindles.
We can see from this practical example the myriad ripple effects associated with fire that affect a considerable portion of society.
What insurance does is to provide resources that should enable the business to be restored back to the position they were before the loss. This provision of resources reduces the downtime in terms of raising up the building again.
If the business does not have insurance for example, it will have to look for funds to rebuild the property and how long this takes is left to imagination. One may argue that a business may make a reserve so that even in an event of fire they can fall on such a reserve.Is this a realistic approach? How many businesses are willing to accurately tie up huge sums of money in a contingent fund enough to pay for such losses as opposed to investing these funds?
Even in unlikely cases where this is feasible, it becomes more prudent to have insurance where you pay a known premium rather than budget for the known unknown.
Given that the benefits of resuming production are beyond the enterprise it becomes inevitable to think of buying insurance for commercial properties not just for the security of the business. It must be viewed as a duty to society.
This duty justifies the need to make commercial insurance compulsory.
Infact as a nation we are lagging behind on this score.
There are many countries within the region and beyond that have made commercial fire insurance compulsory. The same principle of having compulsory motor insurance applies to commercial properties as well.
It is also worth noting that fire insurance is much cheaper than motor insurance. Further when buildings are insured, insurers will add value through their risk management technics.
At their cost insurers conduct surveys and make recommendations for risk improvements. This is not just good for the insured, it is even better for society. The lesser the fire calamities the better our society becomes and should any fire occur compensation is guaranteed through insurance.
Comments: webster@picz.co.zm or webster_tj@hotmail.com or on face book
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(The author is a chartered insurer with twelve years industry experience)