INSURANCE and LOAD SHEDDING: Businesses Must Have Insurance Contingencies for Load Sheddi
Recent Gauteng Business News
Eskom has confirmed that the lights will go out if power usage is not cut by at least 10 percent very soon, warning businesses and consumers of imminent load shedding and power outages. At one point in January, Eskom had a gap of only 450 megawatts between demand and supply, less than one unit of one power station. Eskoms unplanned outages ran higher in January due to boiler tube leaks, poor coal quality and excessive heat impairing performance at dry-cooled stations. Demand is expected to climb as South Africa heads into the colder months, exerting critical pressure on already strained supply.
Insurance the Only Hope Against Municipality Load Shedding
Kim Oosthuizen, Quality and Technical Manager of Aon Risk Solutions, makes the point that you are unlikely to get much recourse from your municipality or power supplier for disruption and any losses that result, but via risk management and insurance you are not entirely powerless', depending what can be negotiated with your underwriters.
Commercial cover in a power outage, whether planned or not, is complex. Take for example a power outage that can lead to a factory coming to a total standstill, resulting in loss of profits or charges incurred, for which there is no revenue generated. The question is what insurance options are available to deal with an instance such as this This is when it becomes potentially complicated, involving a number of different interventions.
Business Interruption cover would not activate in certain scenarios because, policies generally exclude interruptions caused by the wilful withholding of power by the supply authority. However an extension to the policy wording would respond to interruption of the power supply due to damage at the premises of power suppliers, in certain instances, explains Kim.
Oosthuizen also points out that breakdown of machinery at the power suppliers premises needs to extend beyond specified periods in order to claim. Our advice to those who suffer a loss as a result of power outages is to assess the extent of the loss and to report it to insurers immediately so that their rights are reserved, then to await confirmation of the cause.
Risk management is really the only reliable answer, for instance, stocking up with essential components that might become difficult to obtain as a result of business interruption and lessening possible damage or interruption to the business from outages by installing standby power generators. The latter however also comes with its own set of problems and you should refer to your broker for appropriate insurance advice, says Kim.
Business Insurance Coverage Vital to Eliminate High Risks
The time is critical for businesses to be consulting with an expert broker to assist in the development of an effective risk management and business continuity programme and to ensure that policy wordings offer the widest and best possible cover for clients.
A broker brings highly specialised knowledge of the insurance market and an understanding of the differences in policy terms and conditions to the table. More importantly, in the event of a loss, the broker negotiates on the clients behalf with insurers and in the event of a dispute, has the knowledge and negotiating strength to ensure a fair claims settlement for the client, concludes Kim.
Business News Sector Tags: Insurance|