Business Property Insurance & Fire Risk

By: Imraan Moolla, a senior risk consultant at Aon South Africa 

Property insurance, or risk transfer of fires and explosions is critical in ensuring business sustainability and continuity. Apart from transferring the risk, it is important that businesses mitigate the risk, and protect lives. 

Property insurance originated following the Great Fire of London in the 17^th century, which destroyed property to an estimated value of £10m (£1.5b in today’s economy). The dangers and potential damages of fires and explosions is often the biggest threat to a business, due to the value associated with the potential damage as well as the resulting business interruption. 

A comprehensive fire protection system is the most effective mitigation against fire and related risks. Sprinkler systems, hydrant systems, hose reels and other associated systems utilising water at predetermined flows and pressures, are all designed to contain and suppress fire to protect life and property.  

These systems are now legally required, dependent on the occupancy and size of a property. Due to the large claims associated with fires and related incidents, these fire protection systems may also be required by insurers and reinsurers prior to them taking the risk on their books, often requiring higher levels of protection than prescribed by minimum life safety (legislative) requirements to protect assets and subsequent business interruption adequately. 

These systems are carefully designed to cater for the specific conditions experienced at each protected area. The success or adequacy of these systems is directly dependent on their water supply. The team will need to analyse the available water volume and supply in the form of water flow rate and pressure supplied to these systems to find a solution that will address a fire hazard sufficiently.   

With municipal water supply infrastructure remaining the same and with an ever-increasing demand on the supply due to numerous factors such as population growth, urban expansion, climate change and such, water is received at decreased and varying flow rates and pressures – often below the fire system design requirements. As a result, fire pumps and water storage reservoirs have become integral to an adequate water-based fire protection system in ensuring that the water supply to the systems is enhanced and aligned with the system design. These pumps and water Reservoirs are critical in ensuring that a sufficient supply of water reaches all protected areas at the required flow and pressure for the required minimum duration. Having a water-based fire protection system with inadequate water supply completely invalidates the entire system.  

In industry, the most common types of fire pumps seen are centrifugal pumps, which enhance water pressure by the action of a centrifugal force. Water in centrifugal pumps enters the suction inlet of the pump and passes to the centre or eye of the impeller. The impeller rotates which drives the water centrifugally to the rim where it is discharged from the pump at elevated pressures.   

The most common types of centrifugal pumps include: 

1. Horizontal Split Case: The pump housing lifts at the centre line or horizontal plane, which allows easy access to the impeller and associated parts. This pump can consist of a single or multiple impellers and further allows for double suction. 

2. In-Line: The suction and discharge flanges are on the same plane, and this pump supports the driver (electric motor only). 

3. End Suction: Unlike the horizontal split case, this pump is a single suction pump. The discharge outlet and suction inlet are perpendicular to each other. 

4. Vertical Shaft Turbine: This is the only type of centrifugal pump that can operate without positive suction pressure, in other words, this type of pump is not filled with water.  

5. Multistage Multiport: Multiple impellers operating in series, typically used in multiple zone high-rise buildings. 

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The choice of fire pump can make or break a fire protection system. Consultations with approved and competent fire risk individuals must be held when making such a decision. In terms of selection criteria, there are three key factors to consider, namely, water supply, system demand and pump performance. 

1. Water Supply: Is the system fed directly via municipal supply, a raw water source such as a dam or lake, or is the system fed via private water storage tanks. Different sources have varying implications in terms of pump choices. 

2. System Demand: It is important to determine your most remote area of operation, furthest from the water supply and to calculate water pressure and flow requirements at this point factoring elevation and friction into the equation. 

3. Pump Performance: The pump should operate as per the pump curve. Pumps should furnish no less than 150% of rated capacity at no less than 65% of the total rated head, and the shutoff head or churn pressure should not exceed 140% of the rated head for any pump. 

Once the correct pump is selected, pumps must be maintained as per the original equipment manufacturer and insurer requirements.  

• Fire pumps need to be tested on a weekly basis. Electrically driven pumps need to run for a minimum of ten minutes to allow for a transitioned discharge of the initial electric load received when starting the pump, while diesel-driven pumps should run for a minimum of thirty minutes to allow the diesel engine to achieve optimal and normal operating conditions and temperatures.  

• The pumps also need to be serviced annually by approved service providers.  

• Sprinkler system control valves need to be overhauled on a three-yearly basis.  

• The pumps must undergo an annual flow test by an independent, approved third party.  

Too often when conducting risk engineering surveys, following pump analyses and testing, clients are deemed to have an inadequate pump in place or the maintenance controls are considered inadequate which has a direct, negative impact on pump performance. If a site is deemed to have inadequate water supply at their fire protection systems, insurers could withhold cover until the issue is resolved, or they could impose high deductibles and associated increased premiums. 

It is here where the input and insight of Aon’s independent risk consulting team proves invaluable in ensuring that fire protection systems including fire pumps, are designed, inspected, serviced and maintained in accordance with recognised standards which are aligned with insurer requirements. This may involve an initial, additional expense; however, this expense is likely to be recovered in terms of lower premiums, deductibles and appropriate insurance cover that protects all your most valuable business assets.