The potential for damage from fire or lack of maintenance can increase in mothballed or idle production facilities and industrial plants

Many companies are having to shutdown their premises temporarily at short notice due to the Covid 19 pandemic. Improper action or negligence when decommissioning buildings and production facilities brings risks for companies, according to Allianz Global Corporate & Specialty (AGCS).

Mothballed factories or offices are by no means safe from fire or other hazards – in fact such risks can be exacerbated when premises are idle or largely unoccupied. 

“We already see a number of losses that occur on holidays or weekends when employees are not largely present on sites or premises,” says Ralf Dumke, regional head of Risk Property, AGCS Central & Eastern Europe: “The production and operating shutdowns currently being caused by the coronavirus pandemic can also bring increasing hazards for businesses.”

Among the industries most affected are automotive manufacturers and suppliers, airlines, airport operators, mechanical and plant engineering firms, the hotel industry and many other large and small production and service companies.

The coronavirus outbreak has led to considerable disruption for both individuals and business operations worldwide. For businesses, the growing number of restrictions imposed by public authorities means that offices, factories and other sites may remain unused or unattended for a longer period of time than usual, as they are ordered to close. 

“The potential damage caused by fire or as a result of inadequate maintenance remains, or even increases, when operations are shutdown. There are specific measures for loss prevention that can be followed in order to prevent damage during the shutdown of operational facilities as much as possible,” Dumke says.

If possible, regular inspections and tests of fire protection systems should be continued, as these can greatly reduce the effects of a fire. An AGCS analysis of loss events in the insurance industry shows that fires account for almost a quarter (24%) of the value of all insured events in industrial insurance over a period of five years. Fires have caused insurance losses worth more than €14 billion, from around 9,500 claims.

Highly flammable materials such as raw and finished goods, packaging, pallets, waste and flammable liquids located within shutdown buildings should be reduced as much as possible, recommends AGCS Risk Consultants. Where this is not possible, a safety distance of at least 1.5 metres should be maintained between electrical equipment and any remaining materials. 

Another measure to consider is that companies decommission all hazardous process and utility equipment, including pipes for flammable liquids and gases. Depending on the specifics of the location, power to the premises should also be shut down except where required for fire alarms, fire safety and security systems.

Entrance and exit doors should be secured with high quality locking systems and interior and exterior lighting should be kept to a minimum, as necessary for inspection, security patrols and access purposes.