In recent years, insurers have seen fire risks and resulting insurance claims for commercial premises grow significantly. Various factors have influenced risks, including unusually hot and dry weather, demanding work schedules with prolonged hours, and an ongoing drive for sustainability in the UK.
This feature considers what’s influencing risk, unpicking the role of insurers to strengthen underwriting for fire-protection policies to reduce the risk of claims and improve site safety.
Acknowledging different risks and environments
The fire risks for business premises vary between industries, and this needs to be considered by insurers to maximise protection and minimise claims.
The need for a fire protection and suppression system is widely recognised. However, building policies will often simply specify that high-risk sites need to have ‘an approved fire protection and suppression system’. This ambiguous statement can allow business owners to cut corners or opt for a cheaper solution that may not reflect the unique fire risks of their site. For example, selecting an automatic suppression system that’s not fit for purpose, or installing a sprinkler system that protects the warehouse shell, instead of the valuable equipment inside that needs protection for business continuity.
When insuring business assets of high-value, such as vehicles and machinery, insurers may approve a pre-fitted system that’s been installed as part of a manufacturer’s deal. However, it’s important to consider whether these systems are effective in their intended operating environment. For example, in high-risk industries, such as ports and docks, waste and recycling or manufacturing and processing, a pre-fitted system is unlikely to account for the vehicles and machinery in continuous operation with little downtime.
At present, in most high-risk industries there’s no legal requirement for a fire protection system to achieve a certain standard or to meet any particular specifications. To effectively mitigate risk and reduce insurance claims, insurers must finetune underwriting to account for individual site risks. However, this will require an extensive understanding of relevant risks that could occur during day-to-day operations, which begins with a highly detailed risk assessment.
What’s influencing risks?
Increasing reliance on battery power and storage In the UK’s continuous drive for sustainability, high-risk industries are becoming increasingly reliant on sustainable power sources. As a result, the number of lithium-ion (Li-ion) batteries present on commercial sites is increasing.
These batteries present new fire risks, and often, traditional suppression systems aren’t as effective in mitigating these. Instead, they require a unique solution, and insurance policies for buildings planning to store or use these batteries should be outlining this clearly. The use of Li-ion batteries is also growing within domestic vehicles and commercial fleets, so any insurance policies for underground car parks or vehicle storage facilities, for example, should also consider these new risks.
Materials stockpiling The impact of Brexit on international trade for UK businesses means there are often large stockpiles of materials in industries such as ports and docks and waste and recycling. As a result, storage and capacity of combustible materials has established itself as a real and growing issue.
There is now a ‘juggling act’ between insurers and businesses, with sites becoming more and more reliant on installed fire-suppression systems, meaning it’s critical for them to match the environment they’re operating in to effectively reduce fire risks.
Rising seasonal temperatures With the UK continuing to record hotter and drier temperatures than previous years, risk of indoor and outdoor fires continues to increase, particularly in the summer months.
This is also making stored combustible materials much drier and more susceptible to excess heating from prolonged periods of direct sunlight. These materials can form deep hotspots when kept in stockpiles, which are difficult to identify and control with a traditional fire-detection system. Additionally, these hotspots can be spread by high winds, creating further challenges for effective suppression. For the insurer, any policies will need to ensure outdoor fire-suppression systems are able to operate effectively in extreme weather conditions, such as high heat and wind.
How can you insure against them?
A site’s fire risks are ultimately determined by how it’s used, which influences the insurance underwriting necessary to mitigate risks effectively.
All sites are different, but there are some broad questions to consider in order to promote fire safety through insurance policies:
1. What are the individual fire risks? Any general risks will need to be addressed prior to insurance approval in most commercial sites.
However, a highly detailed risk assessment to acknowledge the industry-specific and site-specific risks, and the necessary calibre and the best-suited types of fire protection and suppression methods to reduce these, will create a robust insurance policy to maximise safety and minimise claims.
2. How will fire risk be identified? After these risks are clarified, policies should look for evidence on how fire risks will be detected after they arise. Basic mitigation measures will often be in place in high-risk environments, for example, regular cleaning or maintenance to protect machinery from the build-up of debris, but this must be supported by effective fire detection systems.
Any detection system needs to be suitable for its particular operating environment. For example, for large material stockpiles, thermal-imaging detection may be more effective. Whereas if the detection system is in a manufacturing process flow, spark and ember detection systems may be more effective.
3. How will a site respond after detection? Insurance policies should also consider how a site might respond in the event of a fire – e.g. automatic or manual activation. If the system is manual, how will a system user be notified once a risk is detected?
Once a system is activated, insurers must consider whether particular suppression solutions are suitable for the unique risks of the operating environment. For example, if a site is protecting high-value equipment, watermist systems may be more effective at suppressing fire and minimising damage, whereas for a battery storage facility, a specified battery suppression system may be more effective.
With fire-insurance claims continuing to rise, only approving policies once detection and suppression systems match a site’s unique risks is essential to strengthen site safety and minimise claims.
For more information, go to www.fireshieldsystemsltd.co.uk