WAREHOUSE INSURANCE AND TRAINING
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NA WK conference warned: One commercial fire in five starts in a stockroom. By S. Buckley AssocInstT DISCOUNTS of up to 55 per cent are allowable an warehouse insurance premiums when efficient sprinkler systems are installed, allied to buckets and extinguishers. This was disclosed by Mr. P. E. Stoffel, assistant director of Bray, Gibb and Co. Ltd., when examining important aspects of warehouse insurance at the closing-day session of the annual conference of the National Association of Warehouse Keepers held in London last week. (A report on the first day's proceedings appeared in last week's issue.)
The risk of fire was one every warehouseman lived with and it was common knowledge that warehouse fires often meant total losses. Statistics showed that one in five fires in industrial or commercial premises started in stores or similar areas.
Apart from the risk of fire there were other perils which could be included as extensions to the insurance and which had varying degrees of potential according to individual circumstances. One such peril was full explosion. A warehouse keeper's first reaction might be that there was little risk of it in his own business. But unknowingly he might accept goods from a customer from which there was inherent risk of explosion. There was also the question of damage caused by emplosion occurring elsewhere than on one's own premises. If one were to rely on making recovery from third parties there were a number of possibilities, any one of which could leave the warehouse keeper bearing the loss in whole or in part. Damage by aircraft or other aerial devices was a small risk reflected in the rate of Id. per cent normally charged.
The risk of impact damage could be a consequence of premises adjoining main thoroughfares. Standard cover could be extended to include impact by one's own vehicle.
There was no legal definition as to what constituted damage by storm, tempest, etc., and it had only recently been laid down that heavy consistent rain did not constitute a storm. The only sure way of covering all possibilities in this respect was to ask for a quotation providing for "all water damage". But so far as damage caused by burst pipes was concerned, in a few cases there would not be water laid on to the warehouse and therefore there would be no risk.
After dealing with the main range of perils which were to be included, the next step was to fix the sum to be insured in relation to the basis of claims settlement. In the absence of any cause to the contrary, said Mr. Stoffel, insurers would settle claims on the basis of indemnity, i.e., the cost of reinstating or replacing the property damaged or destroyed, less depreciation. Here, depreciation meant the physical wear and tear and not amounts written down in the books.
It was surely wise to insure for reinstatement value which, in effect, provided for reinstatement or replacement of a building as new, without reduction for depreciation. The sum to insure must be considered under two headings, the purpose-built warehouse, which one would wish to reinstate as before, or the non-purpose-built warehouse where the sum required to reinstate the buildings might be more than sufficient to erect a purpose-built warehouse providing similar storage space, either at the same site or elsewhere.
The insured value, in addition to actual building costs, must include an amount for architects', surveyors' and other consultant fees. As a rough guide Mr. Stoffel quoted a warehouse of standard construction as costing about £3 per sq. ft. Covering buildings of brick or concrete with slate or tiled roofs, this amount included the usual services but not lifts or any other special requirements. Concrete prefabricated buildings ran at about 55s. per sq. ft.
Insurance should also extend to cover the cost of shoring-up and removal of debris which would be incurred before rebuilding could commence. This could •be very expensive.
The growing loss ratio in post-war years resulted in substantial losses in insurance fire accounts and as a result, as an expedient, a flat 15 per cent surcharge was applied to all commercial fire risks. A reappraisal was completed in 1965 and this surcharge has been replaced by a premium adjustment. ht the case of buildings occupied solely as offices it was decided that the former rate should remain unchanged but for the remainder the surcharge was superseded by an adjustment of 15 per cent for certain classes up to a maximum of 200 per cent for other classes.
For warehouses of normal construction, Mr. Stoffel continued, the premium adjustment was 25 per cent though for household furniture storage it was 15 per cent.
The record of sprinkler installation showed that this method of protection was far and away superior to any other and with it insurers offered a rate reduction of 20 per cent in addition to the discount.
Consequential loss was then examined by Mr. Stoffel. In a mixed business it was likely that the warehouse section would need to be treated differently to the remainder of the business. The Policy a warehouse keeper required should provide for the loss of storage income, including receiving and delivery charges and should include increase in cost of working necessarily incurred to diminish the loss.
The first consideration must be the period of indemnity required and this would depend on the estimate of time necessary to reinstate the premises or obtain alternative storage space elsewhere, and, furthermore, the period after the reinstatement which would elapse before the turnover reached the same level as before the fire. Some customers would have to seek other storage and might even commit themselves to long-term contracts which would prevent recovering these customers for some time, if at all. In his company's experience, Mr. Stoffel said, the minimum indemnity period would be 12 months but clients were insuring for periods of up to four years after the date of the loss.
Mr. F. W. Greig, deputy head of service, Industrial Training Services, spoke of the practical implications of the Industrial Training Act.
Every company, he said, should make a critical analysis of what it was doing regarding training. But it should be a continuing process. Every job should be analysed whether simple or complex.
But having decided to go in for systematic training a company should all the time be checking to see if it was getting value from such training. There should be a continuing assessing of changing needs.
The reason for the Act was that too few employers were taking training seriously enough. Now there was an Act which had been drawn by one major party and was in the process of being implemented by another. That was ample proof that the Act was here to stay and it was up to employers to make the best use of it.
Just back from a tour examining Continental training techniques, Mr. Greig said that some of the best schemes in West Germany and Holland were distinctly better than corresponding schemes in the UK. New techniques were being employed on the Continent which could be adopted to advantage in the UK.
Regarding the controversial subject of the levy which was being imposed by boards already set up, Mr. Greig said that if disinterested companies chose to look upon the training levy as just another form of tax they would be at a disadvantage compared with competitors who chose to provide training of a standard to justify grants which might equal or even exceed the amount of the levy.
Warehouse keepers were to be included under the Board to cover the activities of the road transport industry. Following examples in other boards, Mr. Greig said that one would expect the Road Transport Board to have sectional committees who would do the detailed work of the Board and the Act gave power to a board to delegate as it thought fit.
Although the word "industry" was included in the title of the Act the overall scope of training envisaged was much wider than this word normally implied and would eventually cover all aspects of industry and commerce including top management. Already grants had been made by existing boards towards the cost of sending directors on training courses.