Fire, in the most severe cases, is a serious threat to business continuity and survival. In fact some businesses do not recover. Deferred customers may never return. Time is lost replacing stock and specialist equipment, finding suitable alternative facilities and managing customer relations.
Large warehouse fires tend to make the headlines. But these are just the tip of the iceberg. According to government statistics, supported by the industry bodies, there are some 2,500 warehouse fires a year in the UK. In 1999 alone five warehouse fires, each resulting in losses in excess of £1M, were reported to the Fire Protection Association (FPA).
And in recent years the increasing number of high profile property losses in the food and drinks industry has meant that insurers are increasingly reluctant to underwrite businesses. Between 1993 and 2001 Zurich UK Commercial reported warehouse losses in this sector alone totalling £36.4M. The result – increased insurance rates, in some instances up by 900%.
The size and height of a modern warehouse, which may be holding most of a company’s inventory, can mean a disproportionate loss when a fire occurs. Footprints in excess of 20,000sq m are now commonplace. One of the largest warehouses in the UK, operated by a major DIY retailer, is in excess of 74,000sq m with a capacity for 60,000 pallets. The development of such warehouses with complex multi-tier mezzanines, large un-compartmented spaces, densely packed with goods and packaging materials, such as heat-shrink plastic film, cardboard, wooden pallets and polystyrene foam trays, mean that the potential for fire spread is greatly increased.
Plastic pallets in certain sectors have replaced wooden ones. However, users may not be aware of the fire implications – fire tests with small ignition sources have demonstrated just how dangerous plastic pallets can be in terms of ease of ignition, fire spread and the resulting fumes. The insurance industry now sees plastic pallets as a significant risk factor.
Seasonal goods and staff may bring unexpected hazards. Many warehouses rely on temporary staff to see them through peak times. The result may be a reduction in the level of fire safety training given to contract staff.
Research by the Building Research Establishment (BRE) demonstrates that fire may reach the top of 10m high racking in as little as two or three minutes. They also found that a typical fire brigade response, before being operational on site, would be around 20 minutes by which time it is unlikely that the blaze could be controlled and building and contents saved.
From the fire fighters and insurers perspective firewalls are one means of preventing spread but are rarely found in modern warehouses. Even occupants of existing buildings with traditional open-plan design may find that installing firewalls has a positive effect on their ability to negotiate lower insurance rates.
The other recognised and effective containment measure is the installation of a sprinkler system. As Jonathan O’Neill, managing director of the FPA, points out: “The fire service will do a risk assessment when they arrive at a fire. If the warehouse does not have a sprinkler system and no one is in the building, they are unlikely to go in, as their prime role is to save life, and not property. They have to take into account the possibility of building collapse and the safety of the fire fighters.”
The benefits of sprinklers were noted when a furniture factory fire in Ware, Hertfordshire, was brought under control by a six-sprinkler system with a flow switch that automatically alerted the fire brigade. The fire safety divisional officer commented: “Due to the effectiveness of the sprinkler system the company was able to resume trading the following morning. Had sprinklers not been fitted… the company would have suffered a serious if not total loss.”
Building insurance has risen steeply in the past four years, and particularly with regard to warehouses. When assessing a risk the insurance companies will take into account, for example, the industry sector, the size and height of the premises, the building materials used, the nature of any internal fire compartmentation, the type of storage (i.e. block stacking, pallet racking), financial exposure and the fire load of goods and packaging together with the level of fire safety management which is also important.
Although legislation does not require warehouses to incorporate sprinkler systems it is not unknown for an insurance company either to refuse cover for an un-sprinklered premise or for the premium to be prohibitive.
Allister Smith, property risk manager UK at Norwich Union Insurance, comments: “The benefits of sprinkler systems are reflected in discounts of up to 50%. The provision of automatic fixed sprinkler systems has for over 100 years been an efficient and unrivalled means of protecting buildings and their contents from the risk of fire. Their record is impressive and unchallenged.”
Statistics support the views of the insurance industry. Although a sprinkler system cannot prevent a fire from starting it has been proven that, in buildings fully protected by sprinklers, 99% of fires were controlled by the sprinkler system. Statistics provided by the Loss Prevention