In recent years, fire risks and resulting insurance claims for business premises have grown significantly. A number of factors are influencing the risks, including unusually hot and dry weather, prolonged hours to fulfil demanding work schedules and the UK’s ongoing drive for sustainability.
James Mountain, sales and marketing director, Fire Shield Systems, discusses the factors influencing risk and unpicks how insurers can strengthen underwriting for policies surrounding fire protection, reducing risk of claims and ensuring safer properties.
Acknowledging different risks and environments
Fire risks for commercial premises change between industries, and insurance policies need to consider this to maximise protection and minimise claims.
Fire protection and suppression systems are widely recognised as necessary, but often building policies simply stipulate that high-risk sites need an ‘approved fire protection and suppression system’. This creates ambiguity where business owners can cut corners, opting for cheaper solutions, which don’t account for their unique fire risks or operating environments. For example, choosing an automatic suppression system that isn’t fit for purpose, or a sprinkler system that simply protects the warehouse shell – not the valuable equipment inside that’s essential for business continuity.
When it comes to insuring high-value business assets, such as vehicles and machinery, insurers often approve systems that are pre-fitted within a manufacturer’s deal. However, these systems aren’t necessarily going to be effective in every environment. Pre-fitted systems additionally won’t account for vehicles and machinery that are used continuously for extended periods, with little downtime. This is particularly pertinent for industries such as waste and recycling, ports and docks or manufacturing and processing.
For many high-risk industries, there’s currently no legal requirement for fire protection systems to meet certain standards or comply with particular specifications. Finetuning underwriting for individual site risks is essential to mitigate them effectively and reduce claims. That requires a deep understanding of the relevant risks associated with the site’s ongoing use and day-to-day operations, which starts with a highly-detailed risk assessment.
What’s influencing the risks?
Some factors influencing risks across high-risk industries include:
· Increased reliance on battery power and storage Within the ongoing drive for sustainability, high-risk industries are becoming increasingly reliant on sustainable power sources. Accordingly, the amount of lithium-ion (li-ion) batteries present on commercial sites is increasing. For example, in waste streams, powering vehicles and machinery or storing sustainable energy (wind or solar).
Traditional fire suppression systems are less effective in mitigating unique fire risks of li-ion batteries. Instead, they require a unique solution, and insurance policies protecting a building intending to store or use batteries should outline this clearly. Li-ion batteries are also growing within domestic vehicles and commercial fleets, so insurance policies for underground car parks or vehicle storage need to consider these growing risks.
· Materials stockpiling Brexit’s impact on the UK’s international trade maintains material stockpiles in industries such as ports and docks and waste and recycling. Particularly for waste and recycling, ongoing implications of the Basel Convention regulations and China’s ban on solid waste amplify this further. Consequently, storage and capacity of combustible materials is becoming a real and growing issue for these sites.
In turn, this creates a ‘juggling act’ between insurers and businesses, as sites are becoming increasingly reliant on their suppression systems – meaning they must match the operating environment to reduce fire risk effectively.
· Rising seasonal temperatures
The UK continues to record hotter and drier temperatures than previous years, continually increasing the risk of outdoor and indoor fires, particularly in summer months.
Combustible materials are becoming much drier and susceptible to direct heating from prolonged periods of sunlight. When stored in large stockpiles, these materials can form hotspots, which are difficult for traditional fire detection systems to identify and control. Wind can spread these hotspots further, increasing the difficulty of risk management. From an insurance perspective, policies must ensure that outdoor systems can continue to operate effectively throughout more extreme weather conditions.
How can you insure against them?
The use of a building ultimately determines its fire risk and the necessary insurance underwriting required to mitigate risks effectively. Therefore, if properties are subject to a change of use – eg domestic to buy to let, warehouse storage to manufacturing or waste processing to waste to energy – its insurance cover should be automatically reassessed to align with necessary protection measures.
Although every site is different, there are some broad questions to consider for fire safety to be promoted through insurance policies:
1. What are the individual fire risks?
For many commercial sites, general risks will need to be addressed prior to insurance approval, such as protection for material storage. However, a highly-detailed risk assessment, acknowledging industry-specific and site-specific risks, and the necessary types and calibre of fire protection and suppression solutions to minimise these, will strengthen insurance policies, maximising safety and minimising claims.
2. How will fire risk be identified?
Once the risks are clear, policies should look for evidence for detecting fire risks should they arise. Mitigation measures will be in place, such as regular cleaning and maintenance to protect debris build up in machinery, but this needs support from an effective fire detection system. Again, detection systems need to be suitable for individual operating environments. For example, thermal imaging detection may be more effective in waste and recycling or warehouses with large material stockpiles, whereas spark and ember detection systems may be more effective identifying fire risk in a manufacturing process flow.
If a property is surrounded by vacant or derelict buildings, it’s important to ensure effective detection is in place that identifies surrounding fire risks, so the building owner can be notified and – where necessary – activate the suppression system to protect the insured building.
3. How will the site be notified of fire risk?
Insurers must consider how a site would respond should a fire emerge. This includes how systems will activate – eg automatic vs manual activation. If it requires manual activation, how will the system user be notified of risk detection?
IoT is continually making fire detection systems smarter, enabling communication through mobile apps or software to notify of fire risk, sharing any necessary information – such as the precise location of the fire. This facilitates greater communication across systems, enabling targeted suppression and informing the emergency services quickly to prevent fire spread and limit building and asset damage.
4. How will the risk be suppressed effectively?
Finally, once risks are detected, it’s essential to consider suppression, again considering whether this solution is suitable for the unique environment. For example, for high-value electrical equipment, water mist suppression may be more effective in suppressing fire without causing extensive damage, whereas in battery storage facilities, a dedicated battery suppression system may be more effective in minimising risk.
While insurance fire claims continue to rise, ensuring policies are only approved when detection and suppression measures match a site’s unique operating risks is essential.
To find out more, visit Fire Shield Systems or call 0800 975 5767.
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