The insurance industry must demand more fire protection measures from clients if it is to manage fire risks, argues Tony Hitchins.
This week almost saw the first fire fighters' strike in twenty-five years and with five walkouts still possible before the end of the year, fire is at the forefront of the insurance industry.
With the cost of commercial property fire claims in 2001 rising by 30%, the Association of British Insurers has warned businesses that greater emphasis on fire prevention is needed. We all have an interest in improving these figures.
Businesses need to put more effort into reducing the risk of fire but as insurers we need to be more proactive in persuading them to take risk management more seriously.
There are many examples of where potentially multi-million pound fires have been prevented or mitigated following the operation of a sprinkler system. Why then do we accept so many large exposures without such protection?
In the past the Market's `alternative' approach to a client with a large heavy exposure who will not fit sprinklers has tended to be to `share the risk around'. This method of accepting an inadequately protected risk is neither in the interests of the Client or ourselves.
How often following a large fire do insurers and clients comment `if only the risk had been sprinklered'?
I believe that the industry needs to be more consistent in requiring more of the UK's larger risks be sprinkler-protected. Insurers need to look at the overall risk exposure and ensure that the appropriate level of risk protection is achieved.
Most insurers have sprinkler requirement criteria. During the recent soft market, these were often compromised and in some cases completely ignored. It is in all our interests to be tougher and more consistent in this area.
We can of course be positive in the way that we do this. Most insurers offer financial incentives to encourage the fitting of sprinklers whether by offering a discounted premiums rate through help with installation costs.
The industry needs to increase the pressure on government to demand sprinkler installations in new buildings.
With a fire-fighters strike still a strong possibility, those clients (and the insurers that cover them) who have premises fitted with an effective sprinklers system will be sleeping much more comfortably than those who aren't protected.
