How HIRARC Findings Affect Fire Insurance Premium Malaysia
Most factory HIRARC reports flag a familiar set of fire hazards: hot work near combustibles, electrical faults, flammable solvent storage, and combustible dust. Each finding maps directly to a question your fire insurer will ask at the site survey, and the answer shapes your premium. This article makes the bridge explicit by walking through real HIRARC findings, the underwriter question each one triggers, and the answer that protects your premium.
HIRARC findings translate into specific underwriting questions at a fire insurance site survey: each open hazard (hot work, electrical, flammable storage, dust) can affect premium loading, warranty wording, or insurer appetite for the risk.
A factory safety officer in Klang completes the quarterly HIRARC review. One line in the assessment reads: "Bench grinder located 2.5 metres from solvent flammable storage cabinet. Risk rating: high. Existing control: none. Recommended control: separation, fire blanket, hot work permit." The grinder produces sparks. The cabinet contains thinner. The HIRARC team flags it, the safety committee files it, the plant manager schedules a rectification job for next quarter.
Three weeks later, the fire insurance renewal site survey arrives. The first question from the surveyor: "Show me your hot work areas and tell me how they are separated from flammable storage."
This is the bridge most factory operators miss. The HIRARC report is filed in the safety binder. The fire policy is renewed by the finance team. The two documents live in separate worlds even though they describe the same risk. Every meaningful HIRARC finding has an insurance question waiting on the other side. The question gets asked at the site survey, the underwriter rates the risk, and the premium reflects whatever the surveyor was told.
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What HIRARC Is and Why Insurers Read It
HIRARC stands for Hazard Identification, Risk Assessment and Risk Control. It is the structured risk assessment process required for Malaysian workplaces under the broader OSHA 1994 framework, with DOSH HIRARC Guidelines (JKKP DP) setting out the methodology. Section 15 of OSHA 1994 places a general duty on employers to ensure, so far as is practicable, the safety, health and welfare of employees, and HIRARC is one of the practical tools that evidences how that duty is discharged. For a full walkthrough of the methodology, see our HIRARC guideline for workplace safety.
Fire insurers read HIRARC reports because they are the most condensed view of the operational fire risk on a site. A clean HIRARC with documented controls signals that the operator understands their hazards. A HIRARC full of high residual risks with no implementation dates signals the opposite. The reading happens both formally (some insurers request the HIRARC at quotation) and informally (the surveyor sees the report on the safety noticeboard during the walk).
Four HIRARC Findings That Drive Fire Premium
Across the factory portfolios Foundation reviews, four hazard families show up in almost every HIRARC and almost every insurer site survey: hot work, electrical, flammable storage, and combustible dust. The mapping below is qualitative because actual premium impact depends on the rating basis, occupancy, and the insurer's own internal scoring.
Hot Work Near Combustibles
The HIRARC finding usually reads something like "welding or grinding within 5 metres of stored cardboard, pallets, or solvents." The insurer's question is whether a written hot work permit system is in place, who authorises it, and how the area is cleared and watched. The answer that protects premium: a documented permit-to-work procedure, fire watch for at least 30 minutes after completion, and physical separation or shielding. Foundation's hot work permit requirements article sets out the DOSH expectations in detail.
Electrical Faults and Aged Panels
HIRARC entries typically flag panels without periodic thermography, exposed cabling, or DB boards in dusty environments. The underwriter question is whether the electrical installation is inspected and tested at appropriate intervals, and whether thermographic surveys are conducted on critical switchgear. The answer that helps: certified chargeman supervision, scheduled thermography, and a remedial action register. Electrical fault is one of the most common causes of factory fires in the Malaysian market, and insurers price the risk accordingly.
Flammable Liquid Storage
HIRARC flags volumes of solvent, thinner, or fuel held without bunding, ventilation, or proper segregation. The insurer asks about MSDS availability, storage cabinet specification, bunding capacity (typically 110 percent of the largest container), and segregation distances from ignition sources. The answer that helps: a dedicated flammable store with mechanical ventilation, no electrical equipment inside the store unless flameproof, and clear separation from process areas. Where CIMAH thresholds are involved, the conversation widens further.
Combustible Dust
HIRARC findings on dust most commonly appear in food, woodworking, plastics, and metal-grinding operations. The underwriter question: what is the dust collection system, how often is it cleaned, and are there controls on ignition sources within dust-handling zones. The answer that helps: documented housekeeping standards, extraction systems with appropriate filtration, and explosion relief or suppression on enclosed equipment where the dust class warrants it.
The HIRARC to Underwriting Question Map
| Typical HIRARC Finding | Underwriter Question at Site Survey | Answer That Protects Premium |
|---|---|---|
| Hot work in production area, no permit system | Do you operate a written permit-to-work for hot work? | Yes, with named authoriser, fire watch, and post-work observation |
| DB board without thermography records | When was the last thermographic survey of main switchgear? | Within the last 12 months, with remedial actions closed out |
| Solvent drums stored next to process line | Where are flammables stored and how are they bunded? | Dedicated flammable store, bunded, ventilated, separated from ignition |
| Dust accumulation on overhead cable trays | How is combustible dust managed in this zone? | Documented housekeeping standard, extraction in place, supervised |
| Forklift battery charging area adjacent to packing | Is your charging bay segregated and ventilated? | Dedicated bay, ventilation, no combustibles in charging zone |
| Sprinkler heads obstructed by stock height | What clearance is maintained below sprinkler heads? | Minimum clearance maintained per design, periodic audits documented |
The questions above are conventional rather than universal. Different insurers ask in different orders and weight findings differently, but the underlying logic is consistent across the market.
How Findings Translate Into Premium
For Tariff Fire and the Revised Fire Tariff, much of the base rate comes from occupancy classification and construction class. HIRARC findings rarely change those classifications directly. Where HIRARC matters is in:
- Loading or discount decisions. Insurers can load premium for poor risk management or apply discounts for strong controls.
- Warranty wording. A flagged hazard may attract a specific warranty: maintain hot work permit system, conduct annual thermography, restrict flammable storage to designated area.
- Above-the-tariff structures. For larger or non-tariff risks, the underwriter has more discretion, and HIRARC quality directly informs the rate.
- Acceptance versus declinature. For risks at the edge of an insurer's appetite, a strong HIRARC can be the difference between an offer and a decline.
The relationship between HIRARC and premium is qualitative rather than formulaic. We do not quote percentage premium reductions for closed findings because the impact varies by insurer, occupancy, and overall portfolio. What is consistent: a HIRARC that shows live hazards with no implementation dates makes the underwriter nervous, and nervous underwriters either load the premium or attach restrictive warranties.
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Premium loaded after the last survey and you do not know why?
Most surveyor reports do not spell out which HIRARC findings drove the loading. Send us your report and your HIRARC. We will reverse-engineer the loading and tell you which controls would reverse it next year.
Practical Steps Before the Next Site Survey
If the renewal site survey is 60 days away, the time to align HIRARC and insurance is now. The objective is not to invent controls. It is to present existing controls clearly and to close out any finding that can reasonably be closed before the surveyor arrives.
- Pull the most recent HIRARC and highlight findings rated medium or high.
- For each finding, note the existing control, the recommended control, and the implementation date.
- Prepare a short narrative for the surveyor: hazard, control, evidence (permit log, thermography report, training records).
- Walk the site with safety officer and operations together, looking at what the surveyor will see, not what the policy says.
- Where major upgrades are planned but not complete, document the timeline and budget. Underwriters reward visible commitment.
Foundation's HIRARC risk assessment template is structured to feed directly into this kind of pre-renewal review.
Beyond Fire: IAR and Broader Implications
HIRARC findings touch more than fire insurance. IAR coverage looks at the same hazards through a wider lens, since IAR responds to a broader set of perils on a single schedule. Machinery breakdown, electronic equipment, and business interruption underwriters all read HIRARC outputs for clues about operational discipline. A single clean HIRARC therefore does more than support fire renewal; it sets the tone for the entire property programme.
Frequently Asked Questions
A: HIRARC (Hazard Identification, Risk Assessment and Risk Control) is the structured workplace risk assessment process described in DOSH HIRARC Guidelines under the OSHA 1994 framework. Section 15 of OSHA 1994 places a general duty of care on employers, and HIRARC is one of the principal tools used to evidence that duty. For factories and most industrial workplaces, conducting and documenting HIRARC is the expected practice.
A: Some insurers request the HIRARC formally at quotation or renewal, particularly for larger or higher-hazard risks. Others read it informally during the site survey when the document is visible on the safety noticeboard or referenced by the safety officer. Either way, the contents of the HIRARC influence the underwriter's assessment of operational discipline.
A: There is no fixed percentage. Premium impact depends on the rating basis, occupancy, sum insured, claims history, and the insurer's internal scoring. A strong HIRARC supports requests for loading removal, discount application on above-the-tariff structures, and softer warranty wording. The realistic framing is that HIRARC affects whether you are offered favourable terms, not a guaranteed discount.
A: HIRARC is a broad workplace risk assessment covering all hazards: mechanical, chemical, ergonomic, fire, and others. A fire risk assessment is a focused study of fire-specific hazards, ignition sources, fuel loads, means of escape, and detection and suppression. They overlap on fire-related findings but serve different audiences. Fire insurers read both when available.
A: A competent person familiar with the operation, typically the appointed Safety and Health Officer where one is required, supported by a safety committee with representation from operations and management. External consultants can support the process, particularly for high-hazard operations, but the workforce that operates the equipment usually has the most accurate hazard knowledge.
A: At minimum, when the work activity, equipment, or layout changes, after an incident or near miss, and on a periodic cycle (commonly annual). The DOSH guidance frames HIRARC as a living document, not a one-time exercise. Insurers expect to see version control and a recent review date.
A: Refusal is rare for a single open finding if the remediation plan is documented and credible. The more likely outcomes are a loading on premium, a specific warranty attached to the policy, or a higher deductible on related perils. A pattern of open findings with no closure dates is the bigger problem and can affect acceptance.
Foundation Conclusion
HIRARC is not paperwork that sits in a binder until the next DOSH visit. Every meaningful finding is also an underwriting input. The factory that treats HIRARC and fire renewal as parts of the same conversation arrives at the site survey with a coherent story: here are the hazards, here are the controls, here is the evidence. That is the story that protects the premium.
Foundation is a specialist intermediary working with Malaysian factory operators across Fire, IAR, and engineering insurance. We sit on the bridge between the HIRARC report and the underwriter's site survey, helping operators translate operational risk control into the language insurers price against. We do not write HIRARC for clients; we work with what is already there and make sure it is presented in a way that supports the renewal.
Disclaimer: This article is provided for educational purposes and does not constitute insurance, legal, or regulatory advice. References to OSHA 1994 section 15, DOSH HIRARC Guidelines, Tariff Fire, and Revised Fire Tariff are general and may not apply to every workplace or policy. Insurer survey questions are conventional and vary by insurer, occupancy, and risk profile. Premium impact of HIRARC findings is qualitative and depends on multiple underwriting factors. Always obtain formal quotes from a licensed insurer and confirm regulatory obligations with the relevant authority or qualified advisor. Foundation is a specialist insurance intermediary in Malaysia, not a legal advisor. We facilitate access to insurance solutions; we do not perform HIRARC assessments or issue regulatory certificates.