Fire costs soar

According to a new report, in the first half of 2009 insurers paid out £639m for fire damage

The cost of fire damage now stands at a record level according to research published today by the Association of British Insurers (ABI).

In the first half of 2009, insurers paid out £639m - £3.6m every day - for damage caused by fires.

This is the highest half yearly figure ever, and follows on from last year’s record high level of fire claim costs which stood at £1.3bn, a 16% rise on 2007.

Nick Starling, the ABI’s director of general insurance and health, said: “The challenging economic climate is having a significant impact on the fire danger. While the numbers of fires may have been falling, the increase in large-scale fires is increasingly putting lives at risk, and puts more pressure on businesses in these already difficult trading times.”

Report ‘Tackling Fire: A call for Action’ found that: between 2002 and 2008 the cost of the average fire claim for both commercial and domestic fires doubled, to £21,000 and £8,000 respectively.

Arson, which tends to increase during a recession, accounts for half of all commercial fires. Socially deprived areas and schools are especially vulnerable – arson rates are 30 times higher in poorer areas. Twenty schools a week suffer an arson attack, disrupting the education of 90,000 schoolchildren, causing damage costing £65m.

The ABI said that more open plan buildings, which allow more rapid spread of fire, and the increase in out of town developments, where fires can go for longer unnoticed, are among factors contributing to the doubling of fire costs since 2002.

The ABI said two key steps are needed to tackle spiralling fire costs – making sprinklers mandatory in all new buildings and a zero tolerance approach to arson.

Mr Starling added: “Our analysis shows grounds for concern over fire trends. The continued recession is likely to have a significant impact on the number and cost of fires, and potentially on the number of fire-related deaths and injuries. That is why we urge the Government, working with other stakeholders including the fire service the police and insurers, to adopt our proposals to reduce the impact of fire.”

Allianz Commercial's Property Manager, Tony Hutchins, said: “This report is timely, particularly given some of the large fires that have been experienced during the past couple of years, and highlights the issues that many commercial insurers have been facing in recent times. 'Innovative' methods of construction, including the increasing use of timber framing and other combustible materials, changes to the layout of office buildings, the fact that more large commercial premises are sited in 'out of town' locations and, more recently, the recession have collectively had a significant impact on the severity of fires that we have been witnessing. Tighter controls are required, especially in relation to the types of material used and fire prevention methods in new builds, both to reduce the risks of fire and, more importantly, the potential loss of life."