The insurance company BTA Insurance Company SE (henceforward referred to as BTA) has paid an insurance indemnity of more than 829.5 thousand Euros for the consequences of the fire at the warehouse of JSC Latvijas balzams. This is the largest insurance indemnity ever paid by BTA for damage to a property in Latvia. According to the signed insurance contract, the company was reimbursed for the losses suffered in association with the damage caused to the warehouse of the company by the fire, the lost finished produce which was in the premises of the warehouse at the time of the accident, and the losses suffered due to the interruption of the business operations.
The fire broke out at the warehouse of the alcoholic beverage manufacturer JSC Latvijas balzams at Aleksandra Čaka street in Riga on 6 November 2014. The reports issued by the State Fire and Rescue Service, the State Police, and the involved fire investigation experts confirm that the cause of the fire was a fault in the electric lighting fittings. The insurance coverage under the Property Insurance Contract signed between BTA and JSC Latvijas balzams included the warehouse building of the company, the production systems of the company, the finished produce, and the risk of business interruption.
The fire damaged the power supply system and finish of the warehouse, and the heat also affected the strength of the building structures. 170,764 bottles of finished produce were lost as result of the devastating fire. Due to the fire, the company was not able to use the existing warehouse to its full capacity, and, consequently, the business operations were partially terminated. No production systems suffered in the fire.
The largest part of the paid insurance indemnity was the losses suffered due to the interruption of the business operations because, even though the company recommenced its operations already on the next day after the fire, the warehouse premises could not be used for a long time, and this caused additional costs associated with rental of premises, transportation of the produce, and the labour. Losses were also caused by the comparatively long time period until the report issued by the construction experts for the conditions of the use of the premises was received.
Iveta Rijniece, Director of Insurance Indemnities Department of the insurance company BTA Insurance Company SE: “This accident clearly shows the significant losses and damage an unexpected fire may cause to the property of a company. In this case, the largest part of the was specifically the losses suffered due to the interruption of the business operations. Unfortunately, many companies in Latvia insure only their property (buildings and production systems), but do not always secure themselves against the losses suffered, for example, as result of fire, when the company is not able to continue its operations to the fullest extent. By insuring only buildings and systems, the coverage will include only losses associated with the damage to the buildings and systems. However, in most cases after fire, companies are not able to continue their work normally until the buildings are restored, new systems are acquired, etc., and, consequently, the business operations are either partially or completely interrupted during this time period. To protect the company from the losses suffered in such situations, we suggest that other entrepreneurs also consider having insurance coverage for the risk of business interruption, just like this had been done by the management of JSC Latvijas balzams.
The Board Chairman of JSC Latvijas balzams, Guntis Āboltiņš – Āboliņš thanks BTA for the efficient cooperation and emphasises that the company's annual fire prevention measures, trained employees, and regular inspections have also considerably reduced the possible losses at the production plant. The head of Latvijas balzams informs that Latvijas balzams has invested more than 300 thousand Euros in work safety and environment protection over the last three years and also plans further investments to improve the working conditions and train the employees.
BTA is the largest payer of insurance indemnities in Latvia and the only Latvian insurance company which exports financial services and successfully develops its business outside Latvia (in Lithuania, Estonia, Germany, Spain, Poland, France, Italy and the United Kingdom). The gross amount paid by BTA last year in insurance indemnities was 88.4 million Euros, which is by 13.6 % more than in 2013. Last year, the average amount paid by BTA in insurance indemnities was 355 thousand Euros per day or approximately 44 thousand Euros per every hour of operation.
Information prepared by:
Head of Public Relations
BTA Insurance Company SE
Ph. +371 67025661, mobile phone +371 27828796