Finally, we talked to Engineer Ernesto Bodenheimer, loss adjuster and CEO of IBA Latinoamérica who explained to us the problems fires cause during this season, specifically related to fireworks, the agricultural machinery and other recent cases, furthermore making focus on the subject of Adjoining or bordering liability..
TdS: Ernesto, is it purely bad luck or is there something that makes that, in December, January, February, everything gets caught up on fire?
EB: I think it is not bad luck; I believe that there are things that are predictable. If you see the history of recent years in the maintenance expenses category, see the theme of climate change, which for 20 years we have been talking about, see the topic of pyrotechnics, which is becoming more sophisticated, are things that are going to happen. Let’s see what happens today in Argentina: we have a drought, heat, field fire, factory fire and we have floods … worst panorama impossible!
TdS: When we talk about fireworks, is it a myth or reality? You are adjusting a loss and they tell you: “here fell one of these paper sky fire lanterns, which are so nice” Can that be a cause of a fire?
EB: In my career, over the last 20 years, I believe I have certainly had one or two every year and had large claims caused by it. This year by fireworks we didn’t have any, but I know there were one or two.
TdS: High temperatures and climatic factor, how do they affect the generation of fires?
EB: It’s not the same a place where I have cold rooms or motors with air conditioning; textile brands are much more demanding in their electrical installations, there is overheating… it’s a season in which it is more likely to have claims.
TdS: It also happens that sales have declined and there may be accumulated stocks that naturally generate a larger loss than you would have expected.
EB: That also happens; Accumulation of inventories means greater value at risk and a greater possibility of claims.
TdS: What can be done in this scenario? We believe being well insured must be the first point.
EB: I realize that the topic I always discuss is that of risk analysis; You can foresee, things must be seen before. I believe that many companies give little importance to risk analysis; We always discussed it .
When we are going to see a big fire we ask the company for the risk analysis, and they tell you: «we have this insured since 10 or 15 years ago, we did a risk analysis at the beginning, and it never came back». Which is outrageous because the same insured when you show shortcomings is grateful, because in an accident the insured always loses, unless it is fraud. So, the reality is that often, not demanding or doing an intensive risk analysis does not give a clear vision of the risks.
TdS: What scenario do you find in regards to the subject of civil Liability towards third parties as consequence of fires, for example, in a case like the Simmons mattresses factory, yesterday, in which nearby houses were dramatically affected?
EB: Generally, there is a lack of risk analysis, it’s not the same that factory, as a chemical plant could be, people don’t understand the dimension at stake. It’s not the same, being in a place where there is nothing around to a factory surrounded by houses. There are numbers that are at stake, those that the companies give and that producers get, have nothing to do with the reality of the company’s exposure. I think that the liability point is more dangerous and must be taken in greater depth, even Maybe that material damages.
TdS: I am thinking if it’s not time for different authorities to establish measures in which they say: “We’ll give you a space in an industrial park, but you’ll have to take out your factory out of the neighborhood”
EB: Its being done. If you take a look into the last 20 years industrial parks have grown enormously. But what happens in places like Buenos Aires, in Rosario, lin the major cities, there are 30-40 year old factories that are in areas which were then depopulated. Today it has been Populated, and completely changed the risk, I believe there will be a time when they will have to have adequate legislation where, for example, mattress factories, a chemist or a cosmetics warehouse and risks are not going to be able to be inside of a populated area.
TdS: Ernesto, from your experience as a loss adjuster, if you were to give an advice to a producer in terms of coverage what do you think is the most adequate, a full operational risk, a commercial integrate? In which way the producer can offer the best advice to its client to be covered in the event of a significant claim?
EB: Look, I think that when the commercial and financial aspects of the insurance are finished many changes are going to happen. If I had a small or medium business I would use an all-risk operational coverage. I see sometimes big industries use commercial integrates and I think that’s a mistake… they are assigned as a general risk content insured, where there is no break down between merchandise and machinery.
I think the producer has to adapt to use the full operational risk policy when posible and not a fire insurance policy, which many times includes an integral which include sub limits which is not useful.
The other day I had a case of big claim in which the cost of the insurance was 0.1% of what was being sold yearly and they told me the insurance was very expensive. People have to learn to be aware that insurance is not a cost, it’s protection they must have and that if it’s not transferred they are exposed to bankruptcy.
TdS: In the week there was a case in Balcarce where a baler that was working in a field, was burned and as a result of that fire they end up burning a complete mountain range, hundreds of hectares, with affectation of fences and other machinery. What is the panorama today regarding agricultural machinery and this drought so atrocious in some areas of our country?
EB: We have had more than 20-25 burned agricultural machines this year, and we have also had factories that have been affected by accidents that have started elsewhere. I believe that it would be necessary to give more importance to generate awareness in civil liability, subject of which our friend Tornato is professor.
Regarding agricultural machines, practically one is burnt every week, at least, and we can see the relation there is with the great drought. There are machines with almost 20 years of age, the maintenance there is not the optimal, and on the other hand, they have to produce the maximum. Therefore they work 14 or 20 hours and are not cleaned or maintained the way they are supposed to.
I see insurance companies quickly cover them and sometimes we ask them “Do you went to see the kind of maintenance they have? And the answer is “no”. I also warn they are poorly insured regarding the values.