The LWF Blog
Facilities Management & Fire Safety – Insurers & Property Protection – Part 9February 18, 2019 2:00 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 8 of this series, we looked at how the Monopolies Commission produced a report which abolished the tariff system used by Fire Insurers and the Fire Officers Committee (FOC) in its previous form ceased to exist with the technical arm becoming the Loss Prevention Certification Board (CPCB). In part 9, we consider the effect those changes had on the insurance industry and its influence on property protection.
The abolition of the tariff system following the report by the Monopolies Commission meant that the Fire Insurers competed against each other in terms of the cost to the business owner. It also meant that, as the insurance companies were in greater competition with each other, there was less pooling of statistical data on fire losses. Fire Insurers were less likely to impose fire prevention and fire safety requirements that might previously have been deemed necessary, as the potential for their customer to simply remove their business and go with a company with less stringent requirements was now present.
Although there was a down-side from the point of view of the standards imposed by Insurers and the sharing of information, not all was lost. The Insurers’ Fire Research Strategy Funding Scheme (InFIReS) conducts research and performs mitigation on behalf of a group of UK Insurers into mitigation measures from fire and security risks. InFIReS publishes guidance and recommendations for insurers through the Fire Protection Association (FPA).
The extent that the insurers are able to drive fire protection measures in buildings they insure relies on the insurance market conditions. A ‘hard’ insurance market is one where insurers feel able to require more stringent fire precautions from customers, or the insurers impose higher premiums for poor fire precautions. A ‘soft’ insurance market is most commonly seen during times of high interest rates as the insurers are keen to obtain as much business as possible in order to benefit from investing the premiums, the knock-on effect being a lesser demand for fire safety excellence from customers.
The concept of reinsurance also impacts the requirements made by insurers of their customers. Reinsurance is the process by which an insurer will reinsure their risk with other insurers, as they are unable to underwrite the full extent of their potential losses. This can be done on a case by case basis or across their portfolio of business. Reinsurance companies only deal in reinsurance but may drive the requirements made by the insurer to the customer.
In part 10 of this series, LWF will continue to look at how insurers and reinsurers impact the fire safety requirements placed upon customers. 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.