Early bushfire season strikes Australia – what this means for businesses

In November, Australia experienced one of its worst series of bushfire events – with bushfires occurring concurrently across multiple states. At present in December, many of these fires are still burning and spreading to other regions. Of concern is that Australia are not yet in what is considered the “heart” of the bushfire season – typically January and February.

The impact of the bushfires can be seen from the statistics below:

  • More than 620 homes lost
  • More than 1,000 outbuildings lost
  • More than 500 other homes and structures damaged
  • 6 known lives lost (with others still missing and unaccounted for)
  • More than 2 million hectares (more than 5 million acres or 20,000 square kilometres) of land razed by fire
  • Uncountable loss of natural animal flora and fauna, with a major natural koala reserve decimated and the majority of the important and genetically diverse population wiped out
  • 600+ schools closed on one day alone in early November
  • 100+ schools closed in South Australia in recent days
  • First day of no recorded rainfall nationwide
  • Fires Near Me mobile application was the highest downloaded app for many days

What does this mean for affected families and businesses?

The plight of those directly affected by the fires to date have been terrible, to say the least, with hundreds of homes and numerous lives lost in just a few short weeks. Sedgwick’s loss adjusters and customer care team are working to help those whose homes have been lost.

From a business perspective, the impact of these events is not limited to those in the actual fire zone, but is much more far-reaching, with the impact being felt by many people and businesses located large distances from the fires.

Farming businesses

Fires in farming regions have destroyed remaining crops and the soil in many crop growing areas, which will have disastrous longer-term impacts on these businesses.

In addition to this, large swathes of grain and animal feed have been destroyed in the fire zones, which will further decrease feed availability and increase feed prices to farmers all across the country, who are already severely impacted by ongoing drought.

On a number of the claims we’ve seen, we’ve noticed that many farmers have reduced insurance cover in place for their farms, likely caused by the economic constraints from many years of drought. Many only have cover for their primary residence. This leaves them financially exposed in cases where the fire reached other assets on the property such as out-buildings, machinery and sheds. In many instances, these farms did not have business interruption insurance to cover their financial losses.

Schools

Authorities have advised schools to close on days of extreme fire risk. The initial large closures included more than 600 schools in New South Wales and Queensland, and 100 in South Australia on one day alone in each state, with further sporadic localised closures occurring on a weekly basis as fire risks have continued.

School closures have many knock-on effects to business, including reduced staffing, restricting their ability to operate. This has also lead to a loss of leave to staff, extra costs of out of school care for parents, and loss of patronage to many businesses due to general depopulation during these periods.

Health impact

Health authorities have notified the public to restrict their outdoor activities. It is particularly important that people with asthma and other breathing-related ailments avoid being active outside on days where there are significant smoke hazards. These restrictions are impacting discretionary spending and travelling decisions, and limiting those working in outdoor occupations.

The smoke effect is impacting businesses many hundreds of kilometres from any fire or risk zone due to the strong prevailing winds pushing smoke well away from the point of fire origin.

Sydney is the prime example of this, with internationally publicised pictures from early November of the city covered in a haze of smoke from the mid north coast acting as a deterrent to international or interstate travellers.

In recent weeks, Sydney has been covered many days with a continuous smoke haze, with ongoing Health Authority warnings for all persons to stay indoors.

Hospitality

The smoke hazes are affecting spending decisions across the country for many industries and businesses, particularly in the accommodation and retail industries, again even when located many hundreds of kilometres from any direct fire impact.

Businesses that rely on the northern transport corridor are impacted by the ongoing opening and closing of arterial highways between Sydney and Brisbane.

Local hospitality business, such as accommodation and cafes that rely on the peak Australian summer school holiday season, are bracing for a difficult season as holiday-makers consider changing their plans to avoid the risk of bushfires. Many businesses that rely on environmental features such as rivers and lush views to attract customers have already seen a reduction in patronage due to the drought situation, and now the fires and smoke haze are further impacting their business.

Businesses are reporting cancellations of Christmas and early 2020 bookings due to tourists’ concerns about the risk of fires or due to the damage that has already occurred in those local sites.

The ongoing impact of this, with more than 160 fires still burning at various levels at the time of publication and also main bushfire season still to come, could be enormous for many businesses into the future as people make these understandable discretionary and family safety-based decisions into the future.

At Sedgwick, all our teams are doing their best to help families and business recover as soon as possible. Our property specialists are deploying to the field where needed. Please connect with us or look to additional resources on our blog and in our edge magazine if you have questions about planning, coverage or measures to ensure safety and business continuity. At Sedgwick, caring counts. 

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