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Pandemic-led e-commerce boom “may spark rise in warehouse blazes”

11 May 2021

THE ZURICH Insurance Group has warned of a potential rise in warehouse blazes as a pandemic-propelled e-commerce boom sparks a surge in demand for storage and distribution space.

Retailers are scrambling to secure more warehouse units, with demand for sites over 100,000 square feet up by 64% last year, as the pandemic accelerates the shift of shoppers to the online environment. However, Zurich Municipal has cautioned that “outdated” rules on fire sprinklers could fuel an increase in warehouse blazes, harming businesses and the economy in general.

The number of warehouses gutted by fire increased by 42% in the year 2019-2020. That’s according to Zurich’s analysis of the latest available Home Office data covering all 44 fire authorities in England. That statistic has led to renewed calls for automatic sprinkler systems protection to be made compulsory in all new warehouses over 2,000 m2 in size (ie roughly a third of the size of a football pitch).

Currently, Government guidance only recommends sprinklers in warehouses of more than 20,000 m2. This leaves Britain “lagging behind other European countries” where sprinklers are required in sites as small as 1,000 m2 (in the Netherlands) and even 800 m2 (in Norway).

Charles Bush, head of property and energy claims at Zurich Municipal, explained: “Warehouses underpin the huge and growing e-commerce sector. Against the tens of millions of pounds Britons spend online every day, current sprinkler standards look to be increasingly inadequate. As well as posing a threat to life, warehouse blazes devastate businesses, send shockwaves through supply chains and lead to the loss of jobs and productivity.”

Bush added: “While we’re committed to helping firms of all sizes manage their warehouse risks and recover after a fire, the Government must look to address this issue in parallel. Any failure to make new warehouses more resilient to fire risks damaging Britain’s growing e-commerce economy and the many jobs and businesses that depend on it.”

Improving fire safety

Jonathan Dyson, lead for automatic fire suppression systems at the National Fire Chiefs Council, observed: “Sprinklers are an effective part of an overall fire safety solution and can be used efficiently to improve fire safety in a range of new and existing buildings. Due to the size, scale and use of warehouses and the potential risks these pose to firefighters responding to incidents, we firmly believe that suppression coverage should be fully reviewed.”

Further, Dyson stated: “Sprinklers are the most effective way in which to ensure that fires are suppressed or even extinguished before the Fire and Rescue Service can arrive. They save lives and reduce injuries, protect firefighters who attend incidents and reduce the amount of damage caused by fire to both property and the environment.”

Fire crews in England attend an average of 336 warehouse fires every year. That’s nearly one fire episode every day. More than one-in-ten blazes (ie 14%) result in the destruction of an entire warehouse building. In the last decade, fires are recorded to have caused 99 fatalities or casualties.

Shockingly, of the 3,400 warehouse blazes attended by fire crews since 2010, half (49%) of the premises involved didn’t have fire alarms installed, while just 6% of them had sprinklers.

Insurance claims on the rise

Although the long-term trend has seen the number of warehouse fires fall, the cost of insurance claims has increased across the market. Zurich Municipal claims data shows the average cost of large warehouse fires stands at £5.9 million.  

Losses have been driven by the demand for same and next-day deliveries which has sprouted an increase in smaller ‘last-mile’ warehouses located closer to – or otherwise in – urban centres. These are typically older buildings that pose higher fire risks.

The growth in online retail has also underpinned a trend towards taller and larger ‘big box’-style warehouses with more tightly-packed goods. Automation – including the use of robots – has further ratcheted up the risk and costs of warehouse fires.

Charles Bush concluded: “As warehouses grow in terms of their size and density, firms face more severe losses. The destruction of one warehouse is now the equivalent of several. Consumer demand for faster deliveries also means there’s very little margin for delay in processing times. When a disaster strikes, business losses start to mount immediately. By containing blazes, sprinklers reduce the damage fires inflict, helping businesses to recover much sooner.”

As warehouse risks change, Zurich Municipal has stressed that the business is committed to helping small and large firms protect their operations and assets.

Kumu Kumar, head of Zurich Resilience Solutions (which includes Zurich’s risk engineering arm) informed Fire Safety Matters: “Warehouse size and usage is changing so rapidly that they’re pushing the limits to which sprinklers have been tested. We’re guiding customers through what’s proven to work. Using insights based on the latest fire protection research, our risk engineers are developing sprinkler solutions for businesses and the specific warehouse risks they face. We’re also working with customers as they build new warehouses to ensure the right fire protection is designed-in from the start, supporting them at the planning stage right through to sprinkler installation and testing.”