An Insurers Perspective

Passive Fire Protection Seminar
An Insurers Perspective
Essential Principles for the Fire Protection of Buildings
Andrew Murray
Aviva Insurance Ltd
MMU Seminar 26th March 2013
• Financial climate – recent trends in fire losses
• Changing environment
• Insurers Essential Principles
• Core documents, guidance and RISC Authority
Recent developments in fire insurance claims
• Insurers are very concerned about the increasing cost of fire losses
• In recent years fire costs have been at record levels - £1.3bn (£3.4m every
• Business Interruption claims cost a further £200m per year
• Insurers agree that the number of fire incidents is decreasing, but the average
cost of fire is increasing
• We are seeing more multi-million pound fires
• The Government’s most recent estimate of the economic cost of fire was for
2004 and that was £7bn
• The economic cost of arson in 2004 was estimated to be £2.44bn
• Claims inflation still a significant factor for commercial property
Commercial property damage claims by cause
Aviva stats
Accidental Damage
Burst Pipes
Weather (Storm/Flood)
Fire and the economy
Historically there is a link between recession and certain
types of crime, for example burglary
During the last recession (1990-93) the number of deliberate
fires increased from 53,000 to 80,000
Recession is also thought to be likely to increase the number
of fraudulent and malicious cases of arson
Around half of all fires at business premises are caused by
arson and about a fifth of house fires are caused deliberately
Social unrest - the riots within London, Birmingham, Croydon
and other places were a stark reminder of risk of crime in UK
and with many premises lacking the levels of ‘protection’ for
such intense and sustained attacks!
Unoccupied property
Changing environment
Regulatory Reform (Fire Safety) Order 2005 - removal of formal certification
Fire & Rescue Services Act 2004 - abolition of national standards of fire
cover and introduction of Integrated Risk Management Plans
Water supplies - expectations placed on the water undertakers in recent
years to reduce leaks has lead to measures being introduced to reduce
Innovative construction products and techniques
Trade process changes
The protection of the business
“ From a business protection and resilience point of view, buildings complying
just with statutory requirements may be substantially under-protected ”
Property insurance objectives
To reduce the likelihood of fire, either accidental or malicious
To protect the buildings within the business
To minimise the effect of fire on a business
To limit the effects of business interruption and to allow the business to be
trading as quickly as possible following fire
To maintain the health and safety of those in and around the building (incl
& business
Fire safe
Essential Principle No. 1
The building shall be constructed in such a manner that if a fire starts, the
extent of fire and smoke damage will be minimised and confined as close to
the source of fire outbreak as is practicable/feasible.
Essential Principle No. 2
The building shall be constructed from building materials and products that
will not make a significant contribution to the early stages of a fire or
contribute to the spread of fire
Essential Principle No. 3
Measures shall be taken to prevent premature structural collapse and
excessive deflection.
Essential Principle No. 4
Consideration at the design stage regarding potential impact from firefighting water, and to ensure the effect on the environment of the fire effluent
will be minimised.
Essential Principle No. 5
As a minimum all fire protection products to be third party certified to an
appropriate product or performance based standard.
Essential Principle No. 6
All fire protection products/systems shall be designed and installed by
adequately trained accredited specialist installers
Essential Principle No. 7
The building shall be fitted with an appropriate automatic fire alarm system.
Essential Principle No. 8
The fire protection systems shall be regularly maintained so that they are
able to perform their intended function throughout the life of the building.
Essential Principle No. 9
There shall be adequate provision to prevent an arson attack
Essential Principle No. 10
The building shall be constructed that fire cannot spread into the premises
from an adjoining building or other external fire source
Essential Principle No. 11
The building owner/occupier shall ensure an adequate standard of fire safety
management throughout the life of the building
Essential Principle No. 12
Any fuel burning appliance and services or electrical appliance and services
shall be designed, constructed and installed so as to reduce their potential
as an accidental source of ignition.
Business survival
Real cost of fire is estimated to cost the UK economy in excess of £7bn a year
About a third of all businesses that suffer a disaster go out of business within
12 months
the iceberg principle
insured costs
uninsured costs
the claim
defence costs
lost time
lost reputation
lost customers
investigation time
replacement staff
insurance premiums
Core documents and guidance
Insurer engagement – we like to talk
Insurers have a long tradition of providing authoritative guidance on loss
prevention issues
RISC Authority has made available a significant portion of its technical library
for free downloading -
It is in the hands of brokers, risk managers, building designers and fire safety
professionals to fully recognise the benefits of the Design Guide and to
encourage and support its use in the field
RISC Authority
Anticipate future events that may detrimentally impact
upon the business of the UK insurance industry and
invest accordingly to mitigate the consequences
Identify issues currently affecting the UK insurance
industry and invest accordingly to provide insurers
with a means of managing the situation
Maintain and improve the standard texts that
underpins current insurer fire protection practice
To make fire protection financially and technically
attractive to the insured property owner
Act as a focal point for all stakeholders with interests
in fire protection
Encourage commonality with government policy
where prudent
The cost of fire is increasing
Designing for life safety, whilst important, is only part of the solution
Essential principles and the Design Guide are key documents to help you
achieve the total solution
It is in the hands of brokers, risk managers, building designers and fire safety
professionals to fully recognise the benefits of the Design Guide and to
encourage and support its use in the field
A final thought….
Those firms who decide that risk management is
not for them……
……may find that the availability of insurance
becomes more difficult!
Thank you
© Aviva plc 2009

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