Liga Asuransi – Reader friends, how are you? We hope that you, your family and your business are always in good condition and running smoothly. Continuing our previous article about the Glodok Plaza fire disaster, this time we will take a deeper look at the estimated financial losses incurred. This fire is a reminder of the importance of protecting against risk through property insurance. If you found this article useful, please share it with your colleagues so they can also gain valuable insights. Don’t forget, on this blog there are hundreds of other articles discussing risk and insurance that can help you understand more about asset protection. Happy reading!
On January 15 2025, a major fire hit Glodok Plaza, one of the modern shopping centers in the Taman Sari area, West Jakarta. The fire, which is believed to have originated on the 7th floor of this building, quickly spread, destroying many shops, merchandise and other building facilities. This incident not only caused significant material losses but also disrupted the business operations of the tenants and affected the economy around the area. The Glodok Plaza fire is a reminder of the major risks that can threaten commercial properties at any time.
Understanding the calculation of losses due to fire like this is very important, especially in the context of property insurance. A proper assessment can help identify financial impacts, simplify the insurance claims process, and speed business recovery. In addition, this calculation provides insight for property owners and tenants to improve risk management and ensure adequate protection through insurance.
This article aims to provide a comprehensive guide for business owners, investors and the general public regarding the role of property insurance, the claims process, as well as the role of brokers and loss adjusters in mitigating risk. By understanding this, readers can be better prepared for risks and take proactive steps to protect their assets from major losses in the future.
Glodok Plaza Fire Chronology
On Wednesday evening, January 15 2025, at around 21.30 WIB, a major fire occurred at Glodok Plaza, West Jakarta. The fire was first spotted on the 9th floor of the building, which served as a storage area. Soundproofing material made from glasswool in the karaoke room on the 8th floor caused the fire to quickly spread to that floor. A total of 45 fire engines and 230 personnel were deployed to extinguish the fire. After more than 12 hours, the fire was successfully extinguished at 10.00 WIB the next day. The evacuation process involved rescuing nine people using aerial ladders. However, 14 people were reported missing, and as of January 21, 2025, nine bodies had been found. Significant damage occurred on floors 7 to 9, including the collapse of floor 9. Floor 6 suffered minor damage, while the floors below were relatively unaffected. This fire caused major losses for shop owners and tenants, as well as disrupting business operations at Glodok Plaza.
Determining Factors of Losses in Property Insurance
Fires in commercial properties such as Glodok Plaza can result in huge losses, both directly and indirectly. In the context of property insurance, there are several main factors that influence the amount of loss, namely material, operational and indirect losses.
Material Losses
Building Structural Damage
The most visible material loss is damage to the physical structure of the building. In the case of Glodok Plaza, serious damage occurred on floors 7 to 9, including the collapse of the 9th floor. The costs that must be incurred to repair damaged building structures, such as walls, floors and roofs, are very high. Apart from that, supporting installations such as emergency stairs, lifts and evacuation routes also require major repairs.
Burnt Tenant Merchandise
Most of the tenants at Glodok Plaza keep large amounts of stock in their shops. Fires that burn merchandise result in direct losses for tenants, especially for those who have high-value inventory such as electronics, jewelry or technical equipment.
Building Infrastructure
Damage to supporting infrastructure, such as electrical installations, air conditioning systems (HVAC), and security systems (CCTV, fire alarms), increases the burden of repair costs. These systems must be replaced or repaired for the building to resume safe operation.
Operational Losses
Loss of Revenue Due to Temporary Closure
The closure of Glodok Plaza during the repair process caused tenants to lose daily income which is the main source of their business continuity. The longer the closure period, the greater the potential for financial losses experienced by tenants.
Tenant Relocation Fees or Temporary Place Rental
Some tenants may have to look for alternative locations to continue running their business operations. The costs of renting temporary space, transporting goods and operational adjustments are a significant additional burden.
Indirect Losses
Reputation Impact for Tenants and Managers
Fires like these can have a negative reputational impact. Tenants may lose the trust of customers who are hesitant to return to shopping, while building managers face challenges in maintaining Glodok Plaza’s reputation as a safe and trustworthy location.
Potential Loss of Customers or Business Contracts
Tenants who have lost regular customers due to operational uncertainty face major challenges to rebuild their customer base. For managers, this fire can also reduce the attractiveness of new tenants, thereby affecting future building rental income.
Commercial property fire losses are complex and cover many aspects. Property insurance which covers material, operational losses, and extends coverage for indirect losses is the best solution to mitigate this risk. With adequate protection, building owners and tenants can be better prepared to face post-fire financial challenges.
The Role of Property Insurance in Loss Mitigation
Property insurance is an important solution in mitigating losses due to fire. In cases such as the fire at Glodok Plaza, property insurance provides comprehensive protection for buildings, merchandise and other assets damaged by fire. Property insurance policies cover the costs of repairing building structures, replacing burned tenant merchandise, as well as infrastructure losses such as electrical systems, HVAC, and security systems.
In addition to standard protection, property insurance policies can be expanded with additional coverage such as Business Interruption Insurance and Public Liability Insurance. Business Interruption Insurance provides compensation for lost income during periods of temporary closure due to fire, allowing business owners to continue paying employee salaries and other operational costs. Meanwhile, Public Liability Insurance protects property owners from lawsuits if a fire causes loss or injury to third parties.
For example, the fire at ITC Glodok in 2022 shows how insurance plays a key role in business recovery. Property owners who have insurance are successful in getting compensation for building repairs and replacement of tenant goods. With quick claims, businesses in these locations can resume operations in a relatively short time, minimizing the economic impact.
In cases like the Glodok Plaza fire, insurance not only provides financial protection but also speeds up the recovery process. With the support of an insurance broker, property owners and tenants can ensure a policy that is suitable for their needs, protect assets, and maintain business continuity even after a major disaster occurs.
Understanding the Fire Insurance Claims Process
Filing a fire insurance claim is an important step to obtain compensation for losses experienced. This process requires a clear understanding of the claim stages and the documents required to run smoothly. The following are the main stages in the fire insurance claim process:
Claim Process Stages
- Initial Reporting of Incidents
As soon as a fire occurs, the policyholder must report the incident to the insurance company. Reporting can be done via telephone, email, or the digital application provided. The initial report usually includes details of the time of the incident, location, and initial estimates of losses.
- Collection of Supporting Documents
After reporting the incident, policyholders need to collect supporting documents. These documents include police reports, fire department reports, photos or videos of damage, proof of asset ownership, as well as a list of damaged or missing merchandise. This document is important for verifying claims and speeding up the assessment process.
- Appointment of Loss Adjuster
The insurance company will appoint a loss adjuster to evaluate the damage and determine the amount of the claim. A loss adjuster will visit the fire location, document the damage, and create a loss assessment report based on findings in the field.
- Claim Assessment and Payment
Based on the report from the loss adjuster, the insurance company will assess whether the claim complies with the policy provisions. If approved, compensation will be paid to the policy holder according to the protection coverage stated in the policy.
Broker’s Role in the Claims Process
Insurance brokers have a crucial role in ensuring the claims process runs smoothly and fairly. As independent advisors, brokers help clients understand policy terms and conditions, including coverage coverage and claims procedures. Brokers also act as a liaison between clients and insurance companies, ensuring communication goes well.
In addition, the broker assists clients in preparing the necessary supporting documents, accompanies loss adjuster inspections, and ensures that claims are processed on time. If a dispute occurs in the assessment of a claim, the broker acts as an advocate to ensure the client gets appropriate compensation.
With the help of a broker, the claims process becomes more efficient and transparent, giving property and business owners a sense of security that they will receive proper protection for their losses.
Loss Adjuster’s Role in Assessing Losses
Loss adjusters have an important role in the fire insurance claims process, acting as an independent party appointed by the insurance company to evaluate the losses that occur. Their main task is to ensure that the claims submitted are in accordance with the facts on the ground and the provisions of the insurance policy.
Main Duties of a Loss Adjuster
- Carrying out inspections at fire locations
A loss adjuster will visit the fire location to verify the report submitted by the policyholder. They identify the cause of the fire, assess the extent of damage to affected buildings, merchandise and infrastructure.
- Documenting Damage
Any physical damage or loss of assets will be documented in detail. This documentation includes photos, field reports, and a list of lost or damaged items, which form the basis for assessing the value of the loss.
- Calculating Loss Value
The loss adjuster is responsible for calculating the total loss based on applicable standards. This assessment involves estimating the cost of repairing or replacing damaged assets, the value of lost items, as well as other financial impacts such as lost income.
- Guarantee Transparency in Claims
Loss adjusters ensure transparency in the claims process by providing objective and detailed reports to insurance companies. They check the suitability of claims with existing policies, so that agreed compensation payments reflect actual losses.
Collaboration with Insurance Brokers
Insurance brokers work closely with loss adjusters to ensure the claims process runs smoothly. The broker helps provide supporting documents required by the loss adjuster and accompanies the client during the inspection. With this collaboration, the claims process becomes more efficient, faster, and ensures clients receive fair compensation.
Through their duties, loss adjusters play a crucial role in maintaining fairness and trust in the insurance claims process, providing certainty to clients in the midst of difficult situations caused by fire.
Glodok Plaza Loss Calculation Simulation
The fire at Glodok Plaza which hit most of the top floors of the building caused huge losses, both material and operational. The following is a simulated loss calculation to illustrate the overall financial impact:
Estimated Material Losses
Building
The burned area is estimated to cover floors 7 to 9, with serious structural damage to the 9th floor which partially collapsed. The affected area is around 5,000 square meters. Renovation costs for modern building structures, including materials, electrical installations, HVAC systems and sprinklers, are estimated at IDR 20 million per square meter, bringing the total renovation costs to IDR 100 billion.
Tenant Goods
Glodok Plaza consists of various tenants with electronics, household appliances and fashion businesses. The average value of merchandise in each shop is estimated at IDR 500 million, with a total of 100 tenants affected. The total loss of tenant goods is estimated at IDR 50 billion.
Estimated Operational Losses
Lost Tenant Income
The average monthly income of tenants at Glodok Plaza is estimated at IDR 100 million per tenant. If the repair period lasts 6 months, the total lost income for 100 tenants is projected to reach IDR 60 billion.
Relocation Costs and Procurement of New Equipment
Some tenants had to relocate their businesses to temporary locations. The cost of renting and procuring new equipment is estimated at around IDR 100 million per tenant, so the total relocation costs reach IDR 10 billion.
Total Loss Analysis
By adding material losses (Rp. 150 billion) and operational losses (Rp. 70 billion), the total value of losses due to the Glodok Plaza fire is estimated at IDR 220 billion.
This calculation is made based on general information with the assumption that Glodok Plaza has a valid property insurance policy. The loss value stated includes estimates of damage to buildings, tenant goods and operational losses. However, the actual calculation will be made by the loss adjuster and insurance company. They will analyze the damage in detail, verify supporting documents, and calculate the value of the loss based on applicable standards. This process involves on-site inspection, documentation of damage, and assessment of affected assets. With this procedure, the compensation value given to property owners and tenants will reflect the actual loss conditions.
Relevance to Insurance Coverage
If the Glodok Plaza manager has a property insurance policy that covers damage to buildings, tenant goods, and extends Business Interruption coverage, most of these losses can be compensated. However, it is important to ensure the insurance amount covers the total loss and has additional protection for relocation costs and operational disruption.
This simulation emphasizes the importance of property insurance with adequate coverage as an effective risk mitigation measure, especially for commercial properties such as Glodok Plaza.
Important Lessons and Precautions for the Future
The fire at Glodok Plaza is a stark reminder of the importance of fire risk management, especially for commercial properties. With so many tenants, visitors and high-value assets, the risk of fire can not only cause large financial losses but also endanger life safety. Therefore, preventive action and careful planning are necessities that cannot be ignored.
Preventive Measures
Installation of Fire Detection Equipment and Sprinklers
Installing smoke detection devices, fire alarms and automatic sprinkler systems throughout the building is essential. This tool can detect fires early and help minimize the spread of fire. This system must meet applicable safety standards and be checked regularly.
Evacuation Training for Tenants and Employees
Organized fire evacuation training ensures all building occupants know what to do in the event of a fire. These drills should be performed periodically to increase preparedness and reduce the risk of injury or death.
Periodic Maintenance of Electrical Installations and Security Systems
Electrical installations are one of the main causes of fires. Routine checks on electrical installations, HVAC and other security systems can prevent short circuits that have the potential to trigger fires.
Education about Property Insurance and Warranty Extensions
Apart from technical preventive measures, education about the importance of property insurance is a priority. Building owners and tenants must understand the benefits of fire insurance, including protection against business interruption and third party legal liability. By having an appropriate policy, financial risks due to fire can be minimized.
Good risk management is key to protecting commercial properties from the impact of fire. By adopting these preventative measures and understanding the importance of property insurance, owners and tenants can ensure the safety of their assets while maintaining business sustainability in the future.
Conclusion
Fires like the one that occurred at Glodok Plaza emphasize the enormous financial and operational impact that this disaster can have. With damage to buildings, tenants’ goods and infrastructure, material losses are estimated to reach hundreds of billions of rupiah. Not to mention operational losses in the form of loss of tenant income during the repair period and temporary relocation costs. These fires not only threaten business continuity but also put enormous pressure on business owners and the local economy.
In situations like this, the role of property insurance is very important. Insurance provides financial protection against material and operational losses, allowing building owners and tenants to start the recovery process more quickly. Insurance brokers also play a strategic role, helping clients choose policies that suit their needs and ensuring claims are processed efficiently. On the other hand, loss adjusters ensure transparency in calculating losses and provide fair recommendations for all parties.
The invitation to readers is not to underestimate risks such as fire. Understand potential threats, manage risks with preventive measures, and protect your assets with the right insurance policies. Get involved insurance broker to get optimal protection. With careful preparation, you can reduce the impact of disasters and maintain the sustainability of your business in the future.
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