Happy Christmas & Property Risks
Welcome to our December newsletter. With the summer holiday season just about upon us we are busily working on current projects & renewals, & will, as usual be available for you during the holiday period, as we have in the past. Our experience suggests this is a time of year many people like to catch up on a variety of matters time does not allow during the year, & this often includes aspects of insurance. So, we endeavour to be available, because typically no one else is, & respond to any new enquiries which may come in before & after Christmas. Our landline & my mobile will be answered.
In this newsletter we briefly cover the considerable discussion during this last year on risk exposures which appear to becoming increasingly volatile. Specifically in the Cyber world, plus Health & Safety areas. But more specifically on this occasion with property risks. In fact we should all now remain aware of the intricacies & confusion which exist for just some of the traditional property risks.
The lessons from Christchurch, along with the impact of the Building Code & the National Building Standard, are major drivers of additional complexities in the property area. With resilience being an important capability for companies following any loss event, there is a growing focus on the quality of business continuity plans & whether business interruption insurance is aligned to these plans.
With regards specifically the Building Code, all buildings in New Zealand must now comply. The Code defines how a building must perform with regards an intended use, rather than how it should be built. A contingent liability exists when the code has been modified & a building no longer complies with the current code.
Organisations will face the obligation to upgrade a building if any renovation work is to be completed, or if the building suffers damage & is to be repaired or replaced. In the latter case, if insurance proceeds are expected to be used to fund the repair or replacement, the policy limit may not cover the cost of work required to meet the current building standard (if the building did not meet this standard at the time of loss or damage). Older buildings understandably carry more risk in this regard than newer buildings.
With regards the National Building Standard (NBS), a building is considered Earthquake prone if it fails to meet 34 percent of the NBS. Such a building is likely to cause injury or death or damage to another building following a moderate earthquake. The relevant territorial authority will set a period within which the building is to be strengthened. So, one needs to ask yourself, would you be happy to have staff, customers or visitors spend any time in such a building.
A building assessed between 34 percent & 67 percent is considered an Earthquake risk building ~ one where the risk of injury or death is considered lower than an Earthquake prone building. Many buildings in New Zealand fall into this category. Building owners should assess the risk to people & other general liability exposures & reach a decision on the building’s continued acceptability for occupancy.
We hope you have found this newsletter informative & shall cover more next month on Business Resilience, Accumulation of values & adjacent exposures. If you have further enquiries, or know others who may have these exposures please contact us. And, if you would like to discuss anything covered here, please get in touch, Carla or I will be happy to assist.
Finally, we wish to take this opportunity of wishing everyone a splendid & happy Christmas period & our very best warm wishes for the New Year. We look forward to speaking with you all in 2016.
With my best wishes,