Sungei Kadut on insurance 'blacklist'

Aug 25, 2008

RISK AND INSURANCE

Sungei Kadut on insurance 'blacklist'

Tenants unable to get fire coverage as insurers shun the fire-prone area

By Elizabeth Wilmot

WHEN a Sungei Kadut factory went up in a massive ball of flames earlier this month, it took with it the livelihood of dozens of small-business owners who shared the building.

The fire reduced their machinery and hard-earned stocks of wood and rubber to a charred mess, leaving some owners on the verge of bankruptcy.

It appears as though nothing inside the 100m-long factory was insured, but not because its tenants were cavalier about getting fire insurance policies. Rather, the building - with its wooden partitions and stocks of tyres and timber - appears to be on an insurance blacklist.

Tenants said they had asked a half-dozen insurers for coverage, only to be rebuffed each time.

'This place? Who wants to insure it? They come down here but tell us that it is too risky,' said a 50-year-old shopkeeper who wanted to be known only as Mr Goh.

Claiming to be a wooden furniture company based in Sungei Kadut, The Straits Times called 10 insurers and asked about fire coverage. None was willing to even quote a premium, despite being told that cost was not an issue.

Some claimed the area was bad for business because it was too fire-prone. Others just said Sungei Kadut was 'on our blacklist' but did not say why.

The General Insurance Association of Singapore, a body that includes most of the major insurers here, said the area was 'highly exposed' because of its glut of companies that deal in highly flammable products.

'Pockets of businesses in parts of Sungei Kadut may be poorly maintained and multi-tenanted, which increases exposure due to fire risks,' it added.

The blaze that swept through the Sungei Kadut factory on Aug 3 was one of the biggest fires to ever hit the area. It destroyed about 40 units where tenants made furniture, cut up wooden planks for resale and manufactured tyres.

Those who spoke to The Straits Times said they lost thousands in the blaze. One of the worst hit saw $30,000 worth of furniture go up in smoke within five hours.

Some said their losses were so great that it was time to call it quits.

'I won't be starting over again. I'll just stay home and look after my two-month-old grandson,' said Mr Phuah Lam Teng, 62, who suffered losses of a few thousand dollars worth of furniture.

But despite the risk of fires, many said they cannot afford to pull up their roots.

'My customer base is around here,' said a hardware store owner who gave his name only as Mr Ho. 'Moving away means higher delivery costs.'

Miss Goh, a worker with Yong Lee Hong Trading which sells tools, hardware equipment and wood planks, agreed.

While her old factory unit at Kranji Road was insured for fires, business was lacklustre. The move to Sungei Kadut, a well- known wood and furniture-making centre, was good for the bottom line.

Owners also said they cannot afford to replace the highly flammable wooden partitions that divide the shops with metal ones.

'It's not worth replacing the wood partitions with something better, because who knows, we may have to move in a few years' time. Many businesses here do not want to spend the extra money doing that,' said an associate of Mr Ho.

The Sungei Kadut industrial area is filled with clusters of factories like the one that went up in flames earlier this month. About 40 units were wrecked.

Each is roughly 100m long, 5m high and partitioned into about 10 shop units. Most of the companies have only a few workers who are paid daily rates.

The owners rent the spaces from larger companies, which in turn lease the land from the JTC Corporation.

Some bigger companies are able to get fire insurance, though they have to pay astronomical rates. One company said it paid annual premiums that reached a 'five-figure sum'.

The company that owns the buildings ravaged in the fire earlier this month, Sim Hup Co, could not be contacted.

Neither the building owners nor the tenants said they were willing to spend money to make the factories safer.

Dr Teo Ho Pin, who chairs the Government Parliamentary Committee for Law and Home Affairs, called the overall attitude disturbing.

'Everyone there needs to take ownership of the problem and come together to safeguard each other's interests. There needs to be an increase in their housekeeping measures before insurance agencies are willing to take that risk.'

He also made comparisons to the oil refinery at Pulau Bukom, where fire safety measures there are properly in place.

'Industries like those which are involved in timber, oil and tyres should know they are dealing with high fire-risk materials so they need to step up their fire safety measures,' said Dr Teo.

Meanwhile, many tenants have questioned what government agencies have been doing for the beleaguered area, which saw two major fires last year and one major blaze the year before, according to official figures.

The Singapore Civil Defence Force (SCDF) said five days after the recent fire, it formed an initiative known as the Safety and Security Watch Group.

This programme trains industrial workers in Sungei Kadut to detect fire hazards and how to evacuate buildings.

Owners hope that with the help of the SCDF, such fires will be a thing of the past.

In the meantime, the owners are resigned to their plight.

'We leave it to fate and the heavens to protect us against fires,' Mr Goh said with a sigh.

egwilmot@sph.com.sg

Additional reporting by Tan Wei Zhao and Jason Hau.

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What a policy covers
A FIRE insurance policy generally safeguards businesses against losses caused by a blaze.
The coverage can include the building itself, the furniture, the company's stock, office equipment and employees.
A standard policy for a typical retail shop, which includes fire insurance, costs about $240 a year.
But the premiums can vary.
They are based on the size of the store, its location, the nature of the business and things like the number of fire extinguishers, said the General Insurance Association of Singapore.