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Short term Insurance
Monday, March 1, 1999
Burnt offering

A national and comprehensive investigation into the effectiveness of fire services is being funded and con- ducted by The South African Insurance Association (SAIA).
The short-term insurance industry has long been concerned about strong indications that fire services were experiencing major inefficiency problems and that these problems contributed to the severity of fire losses, says Barry Scott, chief executive of SAIA.
“SAIA therefore contacted the Minister of Constitutional Affairs and Development, expressed its concerns and offered to fund and conduct an investigation into the fire services. The Minister’s department had conducted its own research and concluded that many of the services were experiencing extreme difficulties. SAIA’s offer was accepted and terms of reference were compiled and approved by the Minister.”
The investigation, to be completed for presentation to the Cabinet by the end of May, will determine the problems and propose possible solutions for implementation, according to Mr Scott. “It will be conducted nationally in Johannesburg 21 stations will be investigated and in Cape Town, six stations. Pietersburg, Ladysmith, including Ezakheni, East London, including Butterworth, King Williams Town and Umtata; and stations in the Central District Council - North West Region including Leherutsi, Itsateng and Molopo are also included.
“It has become very necessary to conduct this investigation, as an analysis of the South African insurance market fire account showed that severe corrective action was needed. While claims have escalated significantly during the decade, premiums have failed to keep up, resulting in serious losses.”
He adds that further analysis has showed that the incidence of claims had not increased, but the severity had. In other words, there were not more fires, but they were more severe.
“During 1997 three fires alone accounted for losses of more than R1 billion. This brought the total fire losses higher than in any previous year.”
Preliminary research conducted by the industry showed that 56% of the fire stations did not meet acceptable manning levels. When the minimum number of staff required to operate a station did not report for duty, that station was often closed for a shift, sending staff to neighbouring stations, which then had to cover both areas. Suburbs and industrial areas were often deprived of services and in case of a fire, response times increase and the effectiveness of fighting the fire was greatly reduced.
The SABS 090 Code of Practice requires that the first attendance response time be five minutes for high risks, seven minutes for mod- crate risks and twelve minutes for low risks. Yet industry research showed that 44,5% of stations did not meet these requirements. Mr Scott says it has become clear after discussion that 090 will have to be revisited since it may not be applicable to South African conditions.

Copyright © Insurance Times and Investments® Vol:12.2 1st March, 1999
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