The LWF Blog
Facilities Management & Fire Safety – Insurers & Property Protection – Part 10February 25, 2019 12:28 pm
In LWF’s blog series for those who work in Facilities Management, or who have an interest in or responsibility for fire safety, we have been looking at property protection and the role of the insurer. In part 9 of this series, we established that a Fire Insurer may not always be able to bear the potential loss of the policies it has undertaken and so may seek reinsurance through a reinsurance company. The reinsurers have different considerations and in part 10, we consider the effect those changes reinsurance has on the fire prevention and fire safety measures that may be required by an insurer.
An insurance company which provides a policy to protect a building or organisation from fire losses may have requirements they insist upon being met before they will provide cover. They will wish to discuss details such as the provision of smoking facilities on site and any other measures which would prevent a fire occurring in the premises.
A reinsurer will be less concerned with preventing fires which would result in a limited financial loss and are more concerned with the potential for catastrophic loss. For this reason, a reinsurer will be much more interested in the provision of sufficient water supplies for firefighting and if sprinkler systems are provided and in working order. As a reinsurer does not deal with the insurer’s clients directly, the requirements of the resinsurer will be relayed as their own requirements by the insurer.
Large-scale disasters, such as the events at the World Trade Centre in New York, on September 11th 2001, impact insurance companies and serve to highlight the importance of the reinsurer in the level of fire precautions required.
Huge financial losses were made on insurance markets around the world and this, of course, heavily impacted the reinsurance market. Reinsurance premiums increased as a result, as well as a reduction in reinsurance capacity and the assertion of much more stringent demands by reinsurers for the introduction of measures to mitigate against potential catastrophic losses in the future.
The resulting hardening of the insurance market generally meant that once more, fire insurers felt able to demand increased fire protection measures as a condition of insurance when prior to 9/11, the demands would have been recommendations rather than requirements. The insurance market hardening lasted until around 2004.
In part 11 of this series, LWF will look at the role of loss control surveyors or fire surveyors. In the meantime, if you have any queries about your own facilities or wish to discuss this blog series, please contact Peter Gyere in the first instance on 0208 668 8663.
Lawrence Webster Forrest is a fire engineering consultancy based in Surrey with over 25 years’ experience, which provides a wide range of consultancy services to professionals involved in the design, development and construction and operation of buildings.
While care has been taken to ensure that information contained in LWF’s publications is true and correct at the time of publication, changes in circumstances after the time of publication may impact on the accuracy of this information.