As an insurance academician, I have long been pondering over the improvement of fire safety standards in the business premises in Bangladesh.
I finally found out something special for you in exploring the question “How can insurance companies help to bring about changes as regards improvement of fire safety standards in business premises”?
Insurance companies can play a responsible and commendable job by taking an initiative in the improvement and implementation of fire safety devices in the business premises especially in industrial units namely factories, mills etc.
Insurance companies should join hands in taking a firm stand in tackling this vexing issue. It should be a united effort. Otherwise it will fail to achieve its intended result.
Business owners who need fire insurance protection must strictly comply with the requirements of various government agencies namely :
- Fire Service Department
- Department of Environment
- Bangladesh Electric Safety and Security Association etc.
It is the responsibility of the insurer(s) to examine surveyor’s “Pre-Inspection Report” carefully dealing among others with “Risk Improvement Recommendations” (if any) put forward by the surveyor. They must ensure that the recommendations are implemented/complied with by the business before accepting a proposal for fire insurance. Negligence in this matter can cause serious financial problems for the insurers in the event of a fire loss.
Insurance is not a charity. Any fire loss is a waste. It brings pressure on the national economy.
The problem with the Bangladesh insurance sector lies in that insurers with a relatively small paid-up capital, have a small retention on any risk underwritten by them.
They pass on the bulk of the risk to reinsurer(s) who, in the event of a fire loss, have to shoulder the lion share of the loss.
This could be one of the reasons why primary insurer(s) perhaps do not bother to see whether there are adequate fire detection and protection facilities installed in the premises.
There will be occasions when they are misguided or misled by surveyor(s) who do the pre-inspection for every risk in excess of Tk 5 crore made mandatory by Insurance Development and Regulatory Authority (IDRA).
But sadly many surveyor’s fail to perform their responsibilities properly because either they are not adequately qualified, trained or competent enough to do the job.
It would appear that some business houses make more money out of insurance claims than from the business itself!
There is a serious problem with regard to moral hazard in many cases.
It needs to be checked and controlled.
It seems that some of the traders are taking it for granted that their fire losses will be paid by the insurers as and when they occur.
So they do not care about installation of fire safety devices in their premises. Why not? If they can get away without it. Because it all costs money they do not want to spend.
Traders are too greedy about making money at any cost even if it is at the expense of the health and safety of their workers.
Insurance companies should not be a party to such unethical practices.
In addition to looking after their own interests, primary insurers also have a responsibility to look after the interests of their reinsurer(s).
It is not fair to put them down by the irresponsible and negligent act of the primary insurer(s).
Recent devastating fire that swept through a food processing unit in Narayanganj should serve as an eye opener. According to reports appearing in various newspapers and social media, there was either very little or no fire safety system at all in the factory premises.
It may be said that the insurance company in some way has assisted the owners of the factory in abeting this grievous crime amounting to manslaughter by underwriting this risk which they should have rejected in the first place. The million dollar question is whether the insurer can escape responsibility for their negligence?
Many believe that criminal cases should also be instituted against the insurer who seems to have helped the owners in perpetuating this serious crime which cost 52 precious human lives including minors.
This state of affairs can not and should not be allowed to continue. Something must be done now to stop such unethical practices in the future.
Insurers must insist on having compliance certificates namely “Fire Certificate” etc. from the proposer before committing to risk.
In the bigger interest of the insurance sector, the insurer(s) must do everything they can to bring about healthy changes to the rather unsatisfactory and consequently unacceptable system currently prevalent in the market which leaves much to be desired.
