Property assessments come with a new set of risks: how should brokers and businesses prepare?

Tips for brokers & business

1. Take steps to thoroughly familiarise yourself with the product and understand its unique risks. Be aware of the potential for things to go wrong and the specialised response methods that may be required.

2. Assess and review expected service life, safety data, manufacturer’s service conditions and maintenance guides. Be sure to keep an eye out for any product recalls.

3. With new technologies comes a need for continuous awareness-raising campaigns and staff training.

4. A comprehensive, tailored and site-specific approach to insurance is the key to successfully managing the risks associated with emerging technologies.

As new technologies and business innovations take hold, carrying out comprehensive and tailored risk assessments is becoming vitally important for building resilience and effectively responding to – and limiting – losses from incidents and accidents..

When it comes to property risks, claims analysis by Allianz shows that fire remains the largest single cause of business interruption and corporate insurance loss.

Ageing buildings and infrastructure, human error and lack of training have long been identified as contributing factors, but new and emerging risks such as lithium-ion batteries, solar power and energy storage systems are now also contributing to fires and other property-related risks.

We take a look at what brokers and businesses need to know and pass on some practical risk mitigation tips.

Lithium battery risks

Lithium-ion batteries in the workplace are becoming more and more common – they power mobile phones, tablets, electric vehicles and other equipment.

The fact that they’re incredibly compact and have such a high storage efficiency, unfortunately, also makes them vulnerable to runaway overheating when there’s a short or damaged cell. The potential for fires, accidents, property damage and business interruption is a real concern.

Basil Taylor, Manager, at Allianz Risk Consulting Australia, says rechargeable lithium-ion batteries are different from regular lithium batteries. The former are especially risky and their use calls for careful storage, maintenance, and supply chain management.

“Taking a site-specific approach, businesses need to identify unique risks associated with their particular locations and implement rigorous processes to effectively manage and mitigate the risks,” he says.

“Educating yourself and your staff on safe use, charging, and storage is key, as is reviewing your business insurance coverage to deal with the risk.”

Kenji Hosaka, Risk Manager at Allianz Risk Consulting Australia, says that awareness needs to extend to businesses of all categories from SMEs to heavy industrial worksites.

“Insurers and brokers should ask their clients about their practices and plans for battery storage and charging activities and know the unique risks,” he says.

“We’re not talking about a ‘normal fire’ here. The sorts of fires generated by thermal runaway incidents can be particularly severe and hard to contain.”

Alarmingly, lithium-ion batteries can even reignite after they have been extinguished. Awareness, training and having the right sorts of extinguishers on hand are critical.

Solar power and energy storage system risks

With clear environmental and energy cost-saving benefits, the demand for solar energy is growing in the commercial sector alongside its increasing popularity for householders.

As Hosaka points out, sustainability goals and governmental requirements are also playing into the demand. “Australia is targeting an 82 per cent share of renewables across the energy grid by 2030 and reducing the use of fossil energies is a big part of this.”

As with any sophisticated energy system, however, solar poses unique risks and insurance considerations.

Substandard workmanship, environmental impacts to a cell or water infiltration can lead to electrical fires in a roof or inverter and can result in significant damage to a building and its contents. Weather-related risks from wind, storm or hail damage should also be considered.

When it comes to managing solar panel risks, quality and oversight are key according to Taylor. He says this involves, “Having adequate manufacturer warranties around the system and setting it up by an approved contractor. Also making sure there’s a solid process around installation and supply. And, finally, you need to ensure that maintenance and support of the solar system are adequate.”

The importance of tailored solutions

When it comes to weighing these new business and property risks, it’s important to examine your unique circumstances and determine what’s really relevant to you, rather than relying on an industry-wide approach to assessments.

Having an informed broker on your side can help you evaluate insurer recommendations and justify necessary adjustments. And with accurate information at your disposal, you can save both time and money when renewing a policy.

“Insurer, broker and client need to come together to work out the best and most customised approach,” Taylor says.

“This could include education to increase product awareness, having one of our SMEs attend the site and host a training session or help you partner with a third party to find the best solution to managing risk.”