JOHNSTON, RI (April 7, 2020) —As distracted corporate executives close offices, plants and warehouses to reduce COVID-19 spread, other worrisome risks are emerging at these now-idle facilities, warns FM Global, one of the world’s largest commercial property insurers, whose clients include one of every three Fortune 1000 companies.

In addition to fires, vandalism and theft, spring flood season is beginning in the U.S., and hurricane season starts in a mere two months, leaving understaffed facilities potentially vulnerable. Additionally, earthquakes and tornadoes have continued to occur during the pandemic, as the U.S. has seen recently.

“Any of these events could delay a company’s rebound when the pandemic wanes, causing irreparable financial harm such as lost revenue, market share and reputational damage,” says Kevin Ingram, executive vice president, chief financial officer, FM Global. “Countless companies across many industries have paused operations around the world in what has been billed as the biggest factory shutdown since World War II, and more closings are expected.”

FM Global believes losses at idle properties are preventable and recommends companies ensure the following needs are addressed, while prioritizing employee health and safety, to help protect their facilities as the crisis unfolds:

Essential personnel – Contact authorities and explain that security and maintenance personnel on your site are “essential” in the context of stay-at-home orders.

Active security – Maintain staff to perform regular daily rounds inside and outside idle facilities. Watch for criminal activity, smoke, fire or property damage. Consider webcams and sensors to detect out-of-the-ordinary motion, heat or water flow.

Fire protection – It’s important to keep fire protection in place. Have maintenance staff check weekly to ensure sprinkler valves are locked open. Remove debris and ignitable liquids, and closely monitor any welding or other “hot work” taking place on the property. Alert the local fire department of the building’s change in use.

Flood protection – Water damage, among the biggest threats to commercial and industrial property, is a growing risk as sea levels and population density rise. Elevate equipment and equip your property with temporary or permanent flood barriers.

Maintenance – This is an ideal time to perform overdue maintenance, whether it’s repairing expensive machinery or fixing a small roof leak that, if untreated, could delay your reopening and return to profitability.

“It’s human nature to focus on the most sensational risk, in this case a terrible one that’s commanding attention around the globe,” adds Ingram. “Yet it’s important to remember that other serious risks haven’t gone away and continue to affect organizations’ resilience. Firms that stay vigilant are more likely to be the winners that get back to business at the earliest opportunity.”

About FM Global
Established nearly 200 years ago, FM Global is a mutual insurance company whose capital, scientific research capability and engineering expertise are solely dedicated to property risk management and the resilience of its client-owners. These owners, who share the belief that the majority of property loss is preventable, represent many of the world’s largest organizations, including one of every three Fortune 1000 companies. They work with FM Global to better understand the hazards that can impact their business continuity in order to make cost-effective risk management decisions, combining property loss prevention with insurance protection.

FM Global Newsroom Article

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On March 25th, Congress passed the Coronavirus Stabilization Act of 2020. This legislation, which includes over $2 trillion in aid to combat both the virus and the negative economic impacts associated with social distancing, also includes a technical correction to the 2017 Tax Cut and Jobs Act (TCJA) that gives incentives to corporations that retrofit their businesses with fire sprinkler systems.

“Words cannot express the level of dedication that is at work across our nation from family-owned businesses that are ensuring fire & life safety are not compromised in the midst of this COVID-19 crisis that is our new normal,” states NFSA President Shane Ray. “I am in awe of those who are serving on the front lines during this crisis, from first responders (fire, EMS, and police, as well as health professionals) to our members ensuring that fire sprinkler systems are not compromised during this unprecedented national crisis.”

One of the provisions of the TCJA was intended to provide accelerated depreciation for what are known as real estate qualified improvement properties (QIP). Real estate qualified improvement property is defined as any improvement to an interior portion of a nonresidential building that’s placed in service after the date the building is first placed in service. In other words, it applies to all building upgrades and retrofits, with the exception of enlarging the existing building or installing an elevator or escalator. This definition includes fire sprinklers retrofits and would mandate a 15-year depreciation schedule for fire sprinklers and also make them eligible for bonus depreciation.

“This is a big win for our industry because we have been pushing since 2003 and the tragedy of the Station Night Club fire that claimed 100 lives and left over 200 with burn injuries” added NFSA President Shane Ray, who went on to say. “We have been educating and advocating for nearly two decades for incentives and we will continue to make our point that a fire sprinkler system is not a plumbing system and shouldn’t be treated as such in the tax code, as it is certainly not treated the same in the building and fire codes across the country and around the world.”

In the case of bonus depreciation, this would allow fire sprinklers to be depreciated over the next 10 years, even quicker than the 15-year schedule. After 10 years, fire sprinklers would permanently revert to the 15-year schedule. This is an enormous improvement over the legacy 39-year depreciation schedule for fire sprinklers in commercial buildings. Most importantly, it removes what is probably the single biggest hindrance property owners and local elected officials are faced with when deciding to either install sprinklers or mandate them – cost.

Unfortunately, due to a legislative drafting error, real estate qualified improvement property was not included in the list of 15-year properties, even though Congress clearly intended it to be. Since 2018, NFSA has worked diligently with our partners in both the fire service and building and construction industries to correct this error.

In the past two weeks, NFSA has been working to help its members respond to the coronavirus pandemic, with most responses directed at the state level regarding essential services. NFSA has also launched online training classes in response to most states passing shelter in place laws. You can access these resources by visiting www.nfsa.org/covid-19/ .

“As an NFSA member and Board Chair, I would like to thank NFSA members and staff who have worked so hard for the fire sprinkler industry,” added Kent Mezaros, NFSA Board Chair. “From responding to local, state and federal impacts of COVID-19, to this national effort that will see countless numbers of high-rise commercial buildings realize incentives to retrofit with fire sprinklers, NFSA has a made a difference for us all. I would encourage fire sprinkler industry companies who are not members of this association, to consider becoming one. You will see the member value immediately.”

NFSA’s mission is “To protect lives and property from fire through the widespread acceptance of the fire sprinkler concept.” NFSA wants to create a more fire safe world and works to heighten the awareness of the importance of fire sprinkler systems from homes to high-rise and all occupancies in between. The Association is an inclusive organization made up of dedicated and committed members of a progressive life-saving industry. This industry manufactures, designs, supplies, installs, inspects, and services the world’s most effective system in saving lives and property from uncontrolled structural fires. For more information about the National Fire Sprinkler Association, follow us via our social media presence on Twitter (@NFSAorg), Linked In (National Fire Sprinkler Association), and Facebook (National Fire Sprinkler Association).

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March 24, 2020 – As government officials on all levels across the globe issue travel directives and ask non-essential employees to work remotely during the pandemic, once fully occupied buildings are near vacant or dramatically underused. The National Fire Protection Association (NFPA), a global leader in fire, life and electrical safety, urged officials to ensure that fire protection and life safety systems be maintained in all commercial and multi-occupancy residential buildings throughout this global pandemic. They further urge that the personnel and vendors that service those systems be deemed essential.

“While communities are rightly focused on dealing with the pandemic, we cannot put additional strain to our overburdened emergency response capabilities, by not ensuring buildings are protected with the very equipment that saves lives and property,” said NFPA President and CEO Jim Pauley. Pauley said, “First responders rely on commercial and multi-occupancy residential buildings in their communities to have a full array of fire and life safety systems such as working fire detection, alarms and sprinkler systems.”

In order to avoid exacerbating the current environment by compromising fire and life safety, and leaving buildings vulnerable to vandalism, NFPA recommended the following key items:

• All commercial and multi-occupancy residential buildings should maintain fully operational fire and life safety systems as required by the applicable codes and standards.
• Those responsible for these buildings should adhere to the expected schedules for inspection, testing, and maintenance that are vital to their operation. If they are unable to do so, they should contact their local authority having jurisdiction.
• Public and private employees who perform the inspection, maintenance and other responsibilities for these systems should be deemed essential workers.

The full guidance also contained information related to health care facilities, buildings under construction and emergency power systems.  “By all accounts we still have a long way to go before we are able to return to some sense of normalcy,” said Pauley. “The need for buildings to be safe and the systems within them to be operational is and will continue to be critical to public and first responder safety.”

About the National Fire Protection Association (NFPA)

Founded in 1896, NFPA is a global self-funded nonprofit organization devoted to eliminating death, injury, property and economic loss due to fire, electrical and related hazards. The association delivers information and knowledge through more than 300 consensus codes and standards, research, training, education, outreach and advocacy; and by partnering with others who share an interest in furthering the NFPA mission. For more information, visit www.nfpa.org. All NFPA codes and standards can be viewed online for free at www.nfpa.org/freeaccess.

Contact: Lorraine Carli, Public Affairs Office: +1 617 984-7275

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