FM Global warns insurers could pay dearly for neglecting idle properties amid Covid-19

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Losses at vacant properties are preventable believes the insurer

Commercial property insurer FM Global has issued a stark warning to insurers as other concerning risks are emerging at idle properties.

For example, vacant properties are potentially vulnerable to fires, vandalism, theft and stormy weather.

Kevin Ingram, executive vice president, chief financial officer, FM Global said: “Any of these events could delay a company’s rebound when the pandemic wanes, causing irreparable financial harm such as lost revenue, market share and reputational damage.

“Countless companies across many industries have paused operations around the world in what has been billed as the biggest factory shut-down since World War II, and more closings are expected.”

It comes after the government ordered all non-essential businesses to shut down to reduce the risk of spreading coronavirus further. For example restaurants and cafes were asked to operate as takeaways and other businesses were asked to work from home where possible.

FM Global said losses at idle properties are preventable and recommends companies address the following, while prioritising employee health and safety, to help protect their facilities:

Essential personnel – Contact authorities and explain that security and maintenance personnel on your site are “essential” in the context of stay-at-home orders.

Active security – Maintain staff to perform regular daily rounds inside and outside idle facilities. Watch for criminal activity, smoke, fire or property damage. Consider webcams and sensors to detect out-of-the-ordinary motion, heat or water flow.

Fire protection – It’s important to keep fire protection in place. Have maintenance staff check daily to ensure sprinkler valves are locked open. Remove debris and ignitable liquids, and closely monitor any welding or other “hot work” taking place on the property. Alert the local fire department of the building’s change in use.

Flood protection – Water damage, among the biggest threats to commercial and industrial property, is a growing risk as sea levels and population density rise. Elevate equipment and equip your property with temporary or permanent flood barriers.

Maintenance – This is an ideal time to perform overdue maintenance, whether it’s repairing expensive machinery or fixing a small roof leak that, if untreated, could delay your reopening and return to profitability.

Most sensational risk

“It’s human nature to focus on the most sensational risk, in this case a terrible one that’s commanding attention around the globe, added Ingram.

“Yet it’s important to remember that other serious risks haven’t gone away and continue to affect organisations’ resilience. Firms that stay vigilant are more likely to be the winners that get back to business at the earliest opportunity.”