Skip to content

Melbourne Factory Fire

How Business Continuity Planning can protect your bottom line.

In the early morning of April 5th, the Metropolitan Fire brigade were called to an industrial fire at a factory in Campbellfield. What they saw was an out of control inferno with projectiles shooting into the air like rockets. The factory at the centre of this blaze was Bradbury Industrial Services – the Waste business that had its licence suspended this year by the EPA after a failure to clean up its act in March. At the time of the fire, the chemical factory had a stockpile of chemicals almost 3 times the allowable level. Whilst the fire was contained to the premises, it covered Melbourne in a thick blanket of toxic smoke, forcing nearby businesses to evacuate.

The huge plume of toxic smoke generated by the fire became a health concern to people with breathing problems. Particularly those with heart or lung conditions, including asthma, children under 14 years old, pregnant women and people over 65 years old. The EPA went further to advise people to stay indoors and close doors, windows and vents.

This fire was likened to the toxic West Footscray fire in August 2018 which took almost a day to control.

Campbellfield fire Melbourne Source: News.com.au

License to operate suspended in March 2019

The chemical factory had its license suspended in March 2019 due to a failure to comply and rectify issues identified by the EPA. These included:

  • An inspection of the premises found 3 times the amount of material being stored on the premise than it was licensed to store.
  • Storage containers were inadequately labelled.
  • Storage containers being handled outside appropriate areas.

The chemical factory was allowed to hold a maximum 150,000 litres of material including solvents, inks, paints and other flammable materials – before being processed. At the time of the fire, the factory was storing more than 400,000 litres of the hazardous material. It was almost 3 times the allowed level.

For residents and businesses in area, the impact was immediate. With reduced access to neighbouring sites and lock down procedures underway, concerns naturally started for the health and wellbeing of people, but quickly moved to economic fallout for the area. The hidden and less talked about impact is how this now affects every industrial business from Perth, to Penrith to Townsville.

The likely impact on your insurance premiums

The Campbellfield chemical fire is another critical incident adding to global industrial losses in high hazard areas. The recent Insurance and Business Continuity lifecycle webinar presented by RiskLogic and Aon highlighted the tightening insurance market, with underwriters refusing to insure organisations that are within this high-risk category. Impact of incidents such as these are continuing to evolve the appetite (or there lack of) of insurance companies to underwrite high hazard industrial exposures. This ongoing drop in appetite for industrial hazard risks is likely to spread further than the recycling industry. Organisations that have higher hazard operations including heavy manufacturing, or hazmat exposures are likely to see premiums hike and greater risk retention on a good day and an inability to source insurance terms every other.

Immediate considerations to prepare for renewal

Differentiating your risk is key.

Traditionally underwriters and engineers have largely focussed on Material Damage exposures and risk management strategies, however as underwriters continue to scrutinise risk, the more you’re going to have to differentiate your organisation’s resilience to business interruptions.

This means getting your business continuity program into the insurer spotlight, providing evidence that:

  1. Your business understands its threat landscape including likely maximum foreseeable loss (MFL) for business interruption
  2. You have robust contingency plans to mitigate that exposure should a catastrophic scenario unfold (i.e. a well documented Business Continuity Plan)
  3. Your leadership and management have experience in testing the validity of its key contingency strategies to recover the business after a major loss (Business continuity scenario testing and exercising).

Presenting clear evidence of these three elements is going demonstrate your organisation’s attention to managing risk and provide comfort that you’re further up the risk maturity curve than the industry in which you operate – thus differentiating why you’re a safe bet.

“Being able to provide evidence and confidence to the underwriters during their insurance renewal cycle is going to assist organisations in having an optimal insurance outcome and increase premium savings as they move through their insurance renewal cycle.” advises Marcus Vaughan – Director Growth Strategies at RiskLogic.

Sources:
news.com.au
epa.vic.gov.au
heraldsun.com.au

Start a discussion