NZI works to catch electrical fires

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NZI’s expert electrical inspectors help protect New Zealand businesses by offering free reviews*, helping to identify serious defects and guiding repairs to prevent devastating fires

MOST FIRES start from a tiny origin point, and more than 50% of NZI’s fire-related claims have an electrical origin. Common culprits are deceptively simple: loose electrical connections that generate excess heat, outdated lighting systems or poor maintenance practices. These innocuous beginnings can set off a chain of events leading to flames, smoke and gases that, given the right conditions, can have serious immediate impacts and potentially longer-term consequences for the operations of the underlying business. But it’s precisely the minor origins of most fires, and the commonness of their many causes, that make fire prevention measures so essential. The issue is even more pressing as data from leading provider of business insurance NZI shows the problems in this area are more widespread than many may realise. Last financial year, NZI’s team of electrical inspectors identified over 2,700 potentially serious defects requiring immediate attention – after visiting just over 700 customers. “We see defects on a weekly basis that are on the point of imminent failure,” says Garry Taylor, executive general manager at NZI. Timely intervention means these defects can be rectified before they cause damage or business interruption. NZI started out with a team of two inspectors offering free electrical reviews* to commercial property customers, which quickly expanded to seven once the scale of the need for this service became apparent. With electrical faults ranking among the top causes of commercial fires, NZI is further scaling up its efforts, offering preventative reviews and resources to help more business owners safeguard their premises and livelihoods before sparks ignite.

Established in 1859, NZI is New Zealand’s leading provider of business insurance. We are proud of our 165-year history of supporting customers in their time of need. NZI is proudly backed by IAG New Zealand, the largest general insurer in the country. IAG New Zealand also trades under the State, AMI, NAC, Lumley and Lantern brands and provides the general insurance products sold by ASB, BNZ, Westpac and The Co-operative Bank. IAG New Zealand employs over 4,000 people, holds relationships with one in every two New Zealand households and insures over $1.07 trillion of commercial and domestic assets.

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Average cost of a claim for a commercial fire or explosion

$270k

“The financial cost of an unexpected shutdown due to an electrical fault is likely to be many times more than the cost of a regular electrical check for most businesses”

Garry Taylor, NZI

Most business owners are unaware of the latent problems that lurk within their premises. Taylor recalls a machinery-servicing workshop where a fault occurred during the inspection of the older-style switchboard. “Our electrical inspector opened the board to inspect the back, and a damaged cable short-circuited, cutting the workshop lights. The incident could have caused serious harm to an unqualified person and potentially serious damage to the premises. An electrician was called to have the cable fixed that day.” Switchboards are particularly vulnerable, with electrical malfunctions being a leading cause of commercial building fires.

NZI data shows that nearly a third of electrical fires originate in these critical junctions. Other weak points include a lack of regular maintenance, along with the misplaced belief that electrical infrastructure is ‘set and forget’. Taylor points out that like many other aspects of operating a business smoothly, regular maintenance of electrical systems is crucial. “The financial cost of an unexpected shutdown due to an electrical fault is likely to be many times more than the cost of a regular electrical check for most businesses, not to mention the additional potential impacts on staff and customers from a health and safety perspective,” he says. Fluorescent lights are also problematic. Once a staple of commercial spaces, these lights now represent a significant risk as the systems are prone to electrical faults and consume more energy than modern alternatives. “We see lots of instances of faulty fluorescent lights,” Taylor says. “LED lights have advanced in recent times, draw less electricity, run cooler and therefore cost less to run, and have become cheaper, so there are good reasons for customers to change.” The reality is that modern businesses operate in a complex ecosystem of electrical infrastructure, where one overlooked connection can spark a chain of devastating consequences. Many business owners remain unaware of these risks, operating under what NZI describes as a “run to fail” standard practice. “It’s natural to hope and expect that it won’t happen to us,” Taylor says, “but our claims data shows that it happens to many New Zealand businesses, and the impacts can be severe.” The average cost of a claim for a commercial fire or explosion can exceed $270,000 – a figure that doesn’t account for potential injuries or reputational damage.

As NZI has scaled up its electrical reviews, it has found a growing cohort of customers who realise they may have dodged a bullet. “Our electrical inspectors see first-hand how grateful business owners are when hazards that could have big impacts on their business operations are identified.” In 2025, NZI is planning to increase its reviews to 1,200 customers.

broker-client relationships. The material includes practical guides to help protect businesses from electrical fire hazards, covering things to consider and look out for when managing their electrical infrastructure, as well as what to expect from an electrician when they carry out work or fix any defects. The team’s approach is deliberate. “When we set up the team, we focused on hiring the best people, equipping them with the latest technology and equipment, and training them to use it well,” Taylor explains. For example, the advanced thermal cameras that NZI’s inspectors carry play a crucial role in identifying loose connections that register temperatures above safe operating levels. The team also works closely with companies developing ‘In-cabinet Fire Suppression’ systems that can be installed in switchboards to prevent potential fires.

says, “If we can avoid the preventable claims, we can help keep insurance costs sustainable into the future. It’s hard to measure the impact of a fire that never happened; however, we know that early intervention from our team helps provide peace of mind to our customers. Having electrical defects and hazards identified enables businesses to have the issues rectified, at a time that suits them, creating more resilient and safer businesses.”

Male commercial electrician at work on a fuse box, adorned in safety gear, demonstrating professionalism

A disaster waiting to happen

Building business resilience

Published 28 Apr 2025

“Knowledgeable, experienced personnel connecting with customers directly is important to educate and encourage customers to better understand the risks and how they can manage them proactively”

Garry Taylor, NZI

Source: NZI, November 2024

Source: NZI

Number of electrical reviews NZI aims for in 2025

customers

1,200

When a catastrophe hits the headlines, it’s easier to encourage people to mitigate risk. Nothing focuses a business owner’s mind like a disaster. “After events, we see customers’ attitudes to risk sharpen,” Taylor explains. “Things like the pandemic, floods or earthquakes are often an unfortunate reminder for businesses about what can go wrong. “[But] when things return to ‘normal’ or BAU, business owners get busy and don’t always have as much opportunity to focus on ensuring their business continues to be resilient. We try to remind people of what can happen and what they can do to help mitigate it.”

NZI flips the traditional ‘ambulance-at-the-bottom-of-the-cliff’ approach to one that more actively seeks to prevent loss in the first place. “We want to empower customers to take the lead on their own risk management by helping them identify potential problems,” Taylor emphasises. “We understand that business owners are incredibly busy and need useful information to help their risk decision-making. We have developed new material to support customers when they engage with an electrician.” These resources enable brokers to have more detailed conversations with customers, and help support robust

Looking ahead to an uneventful future

Technology meets expertise to benefit the customer

Perhaps oddly, the best outcome for NZI would be that it does its job so well that there are no fires and fewer serious defects for the electrical inspector team to catch. It will all come down to getting customers up to speed on the dangers currently at hand. “Helping to educate our business customers is a big part of this,” says Taylor. “Ensuring people remain vigilant can be difficult. Knowledgeable, experienced personnel connecting with customers directly is important to educate and encourage customers to better understand the risks and how they can manage them proactively.” Taylor acknowledges that insurance claims will still happen, but

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