By George Jennings & Kobus van Niekerk

On September 2nd, 1666, a fire broke out in Pudding Lane, London close to where the monument now stands. When this memorable fire had run its course some days later, more than 174 hectares of the City of London lay littered with debris and smoking ruins. Citizens were faced with a loss exceeding 10 million Pounds, which at that time was a significant amount of money.

This great fire of 1666 was responsible for men’s minds being directed in search of a practical scheme whereby money should be contributed by the many in order that those contributors who, someday, suffered from a fire loss, might receive aid after the occurrence (Technology of Fire Insurance – John Howard-Blood). 

However, since 1666, the fire peril has not diminished. In fact, it has increased despite the development of many techniques and implementation of strategies to prevent and fight fire. 

No immunity to fire

The engineering insurance industry is not immune to fire risks, in fact not only does the fire risk exist on every contract site and in every contractor’s plant yard, but the third-party liability insurance exposure is equally as prevalent.

Many contractors work in an environment which is prone or vulnerable to starting a fire. For example, in circumstances where the spread of fire is inevitable such as (but not limited to) a drilling contractor site in the open veld or on a farm. South Africa is particularly exposed to veld fires in the Western Cape, Free State, Gauteng, Limpopo, and Mpumalanga Highveld. Very few fires are spontaneous, some are accidental and others, deliberate or with malicious intent. 

Veld fires can be cataclysmic. The South African government has produced legislation to control this natural phenomenon, and underwriters should take cognisance of the following provisions of the National Forests Act of 1998 and the National Veld and Forest Fire Act of 1998. 

Negligence unless proven otherwise

These acts blandly state: “Notwithstanding anything to the contrary in any law contained, whenever in any proceedings under this Act or at Common Law the question of veld or forest fires arises, negligence shall be presumed unless the contrary is proved.” 

Liability Insurance underwriters should take notice of this “strict liability” which exposes our civil contractors and to a lesser extent all other contractors.   

Part played by global warming

Elemental perils are directly influenced and attributed to by global warming. Climatic change stretches from ice melting at the North Pole to arid deserts all over the world. Rain patterns and weather cycles are changing. Storms are not only damaging buildings and infrastructure but are also interfering with shipping and flight paths around the globe. 

Underwriting expertise keeps the show on the road

The construction industry is affected by natural major elemental perils, with requirements on both sides of the business; the one side of the business needs the repair work on existing structures caused by an event in the form of immediate temporary repairs; and the other side requires the reinstatement of the permanent works.  

It is important that construction underwriters are prudent in their underwriting approach to long-term contracts. Underwriting expertise and techniques should keep track of unforeseen adverse climatic conditions and precautionary measures such as escalating deductibles.

Building conditions and techniques may change to cater for severe drought followed by pouring rain. This could lead to unforeseen working conditions with different exposures to be catered for by insurers who need to keep track of our ever-changing weather conditions. 

Consort, by study and research will keep their products and service in line with the changes facing the construction industry. These changes bring challenges, and the challenges also bring innovation and solutions to the insurance industry - phenomena which Consort will not ignore. 

Consort Technical Underwriting Managers