UK Fire Losses An Insurer Perspective

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UK Fire Losses An Insurer Perspective

• Douglas Barnett
• Head of Customer Risk Management
• 13th July 2009

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Fire and Rescue Service Reforms

• They were generally welcomed by insurance
  industry and seen as a necessity to drive
  modernisation
• They have assisted in many ways including
  specialist training and response to current risks
  such as terrorism and flooding.
• They looked to drive fire safety management onto
  the employers agenda
• They ensured individual Fire Rescue Services
  were managed as a professional business.

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What is our current view?

• Concerned that the changes to fire safety may
  have gone to far and are being detrimental to the
  well being of UK business communities.
• We have been previously accused of scaremongering
  and asked to provide evidence we now have a
  growing folder of incidents and research reports.
• Business owners regularly comment that insurers
  are the only stakeholder providing advice.
• Recession will impact fully in 24/36 months as
  the result of business cuts and reduction in
  maintenance are seen.
• Personal View
• It is only a matter of time now before a serious
  loss of life occurs in a commercial or
  residential building.

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Large Losses

• Frequency is similar to previous years however
  financial loss is increasing at alarming rate
• Buildings where previously damage may have been
  limited could now be total loss.
• Fire Fighters are advising that they are
  attending fires where they either do not have
  knowledge, manpower or immediate accessibility to
  resource.
• RISC Authority report now complete and issued to
  all FRS and stakeholders for information.

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Modern Methods of Construction

• Massive growth in MMC in city centre and urban
  blocks of flats
• No large scale testing of materials or systems
  has been conducted.
• Regular use of combustible materials to deliver
  compliance with environmental requirements.
• Buy to let resulted in massive construction
  programme by private developers.
• We now have evidence that these structures may
  have been poorly designed and/or constructed
  and poor maintenance has yet to start!

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MMC continued

• Basic elements of passive fire protection are
  being found to be missing
• Small single compartment fires are spreading
  between floors and compartments
• Fire fighters are at a loss as to how adequately
  to tackle these incidents
• Who are auditing the approved inspectors our
  audits have all been after multi-million fires
  and concern is growing.

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Sprinklers Whats the UKs Issue?

• They save life
• They save property
• They save jobs
• HOWEVER
• We are reducing fire cover closing fire
  stations
• We have longer attendance times for fire crews
  to reach incidents
• We have different response between neighbouring
  Fire and Rescue Services
• We have more traffic congestion in our towns and
  cities during working hours.

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Sprinklers Whats the UKs Issue?

• They could save communities if you examine the
  true economic cost of fire.
• They perform consistently to their design
  parameters.
• They are accepted across the world as integral
  part of fire safety design.
• Architects still complain (and more worryingly
  believe) they result in extensive water damage
  when activate.
• They are being actively designed out of some of
  our largest and most complex buildings.

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Sprinklers whats the UKs Problem?

• We have massive distribution warehouses with no
  fire compartmentation.
• We are ignoring automatic fire alarms signals
  and refusing to attend unless an employee goes
  and finds the fire and then confirms to fire
  control centre
• Although principally applying to commercial and
  not public authority buildings
• Community fire safety doesnt target commercial
  business
• Are Businesses not an integral part of the
  community?
• Fewer buildings are inspected by any independent
  auditor or assessor
• Fire brigade presence is negligible if at all
  unless you are in one of the very largest risk
  buildings
• Insurers have reduced the level of premises
  inspections as consolidation has progressed.

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Our European Colleagues
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Sprinklers Perform Over a Lifetime

• Manufacturer of Cotton wool with business dating
  back to 1821 currently with 20 employees in small
  village.
• Sprinkler installation installed late 1950s.
• Water supplied via adjacent culvert.
• Regularly inspected and tested.
• Fire 2009.
• Sprinkler operated.
• Minor Damage to building.
• Exposure circa 4M.
• Loss circa 400k.

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Extract from Loss Report
On receipt of the emergency call, XXXXXX Fire
Rescue Service dispatched four tenders manned by
20 fire-fighters, on his arrival, the senior
officer attending found that the fire had been
largely contained due to the operation of
sprinklers within the upper storey of the two
storied building but, nevertheless, water jets
had to be deployed to complete extinguishment in
that area. Thereafter, fire-fighters assisted
in ventilating smoke from the premises whilst
officers manning one tender remained throughout
the night to ensure that all hot spots were dealt
with and that there would be no re-ignition.
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Fire Engineered Buildings

• Insurers can have issues with Fire Engineered
  buildings
• Identification of Fire Engineered Buildings.
• Continuity of building managers their
  understanding of engineering protection systems
• Evaluation of Fire Engineered Calculations.
• Fire Engineering being utilised for financial
  savings.
• What chance does the business owner have?
• Part of the FE strategy would normally assume
  fire brigade attendance within an assumed time
  frame IRMP?
• How often should the fire strategy of a building
  be re-evaluated to make the fire risk assessment
  competent?

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Fire Safety Engineering
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Insurer Guidance on Property Protection
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Insurer Guidance on Property Protection
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HOTELS

• Two Prestigious UK Hotels each 30 Floors
• Both have extensive glass curtain walling.
• Both have extensive residential accommodation on
  upper floors.
• One has sprinkler protection up to 14th Floor.
• One has water mist system to common areas in
  part.
• One had AFD in fault on 3 occasions visited over
  6 week period.
• One has a number of apartments extended to floor
  above.
• Both had no sprinklers in basement.
• Both have severe restrictions to allow adequate
  fire fighting.
• Both surrounded by areas of severe traffic
  congestion.
• 1 is city centre one is 10m from river bank.
• BOTH HAD CONSIDERABLE ALTERATIONS TO THE ACTIVE
  PASSIVE PROTECTION AS DEFINED IN THE ORIGINAL
  DESIGN SPECIFICATION.

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COMPARISON OF TIME OF CALL
36 in quiet hours compared to 19 of all fires
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Audit Commission Rising to the Challenge

• 10 of FRS budget in England could be cut (200M)
• Fails to put issues of funding business
  planning together
• Is this not what Integrated Risk Management
  Planning is?
• Remove pumps from operational duty at night when
  there are fewer fires.
• Calculate pumps/crews required on a simple
  formula of calls a station has previously
  responded to
• This is not risk assessment and does not take
  into account current or future demands or
  changing circumstances.
• Recommends central league tables actively
  publicising those FRS delivering all elements of
  modernisation
• Why not include number of people rescued and
  amount of property saved based on economic cost?

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Actions Required Now

• Increase level of advice and enforcement for
  commercial buildings
• Compulsory KPI to be introduced for Fire Rescue
  Services.
• Reduce the floor area of warehouses and large
  retail premises where sprinklers are required in
  line with our European colleagues by reviewing
  amending Approved Document B.
• Remove the threat of further spending cuts to
  Fire Rescue Services.
• Immediately commence large scale testing of MMC
  used in modern blocks of flats replicating what
  has been built over the last 5 years there will
  be few new flats built for a few years!
• Immediately review the up-skilling of knowledge
  and training required for fire-fighters in
  metropolitan areas where MMC is being used
  commonly in residential flat developments.
• Penalise financially those building owners that
  do not manage their automatic fire detection
  systems and cause unwanted fire signals this
  must include public authority properties
• Introduce mandatory sprinkler installation for
  such risks as large hotels, nursing and
  residential homes.
• Local information exchange should be considered
  between FRS and insurers to assist with fire
  crews with knowledge of local risks hazards.