1. An Insurers Perspective Essential Principles for the Fire Protection of Buildings Allister Smith Aviva Insurance Ltd Passive Fire Protection Seminar

2. Agenda Financial climate – recent trends in fire losses Changing environment Insurers Essential Principles Core documents, guidance and RISC Authority

3. Recent developments in fire insurance claims Insurers are very concerned about the increasing cost of fire losses In recent years fire costs have been at record levels - £1.3bn (£3.4m every day) Business Interruption claims cost a further £200m per year Insurers agree that the number of fire incidents is decreasing, but the average cost of fire is increasing We are seeing more multi-million pound fires The Government’s most recent estimate of the economic cost of fire was for 2004 and that was £7bn The economic cost of arson in 2004 was estimated to be £2.44bn Claims inflation still a significant factor for commercial property

4. Commercial property damage claims by cause Aviva stats

5. Fire and the economy Historically there is a link between recession and certain types of crime, for example burglary During the last recession (1990-93) the number of deliberate fires increased from 53,000 to 80,000 Recession is also thought to be likely to increase the number of fraudulent and malicious cases of arson Around half of all fires at business premises are caused by arson and about a fifth of house fires are caused deliberately Social unrest - the riots within London, Birmingham, Croydon and other places were a stark reminder of risk of crime in UK and with many premises lacking the levels of ‘protection’ for such intense and sustained attacks! Unoccupied property

6. Changing environment Regulatory Reform (Fire Safety) Order 2005 - removal of formal certification process Fire & Rescue Services Act 2004 - abolition of national standards of fire cover and introduction of Integrated Risk Management Plans Water supplies - expectations placed on the water undertakers in recent years to reduce leaks has lead to measures being introduced to reduce pressure Innovative construction products and techniques Trade process changes

7. The protection of the business “ From a business protection and resilience point of view, buildings complying just with statutory requirements may be substantially under-protected ”

8. Property insurance objectives To reduce the likelihood of fire, either accidental or malicious To protect the buildings within the business To minimise the effect of fire on a business To limit the effects of business interruption and to allow the business to be trading as quickly as possible following fire To maintain the health and safety of those in and around the building (incl firefighters) Building Design Life Safety Property & business protection Fire safe

9. Essential Principle No. 1 The building shall be constructed in such a manner that if a fire starts, the extent of fire and smoke damage will be minimised and confined as close to the source of fire outbreak as is practicable/feasible.

10. Essential Principle No. 2 The building shall be constructed from building materials and products that will not make a significant contribution to the early stages of a fire or contribute to the spread of fire

11. Essential Principle No. 3 Measures shall be taken to prevent premature structural collapse and excessive deflection.

12. Essential Principle No. 4 Consideration at the design stage regarding potential impact from fire- fighting water, and to ensure the effect on the environment of the fire effluent will be minimised.

13. Essential Principle No. 5 As a minimum all fire protection products to be third party certified to an appropriate product or performance based standard.

14. Essential Principle No. 6 All fire protection products/systems shall be designed and installed by adequately trained accredited specialist installers

15. Essential Principle No. 7 The building shall be fitted with an appropriate automatic fire alarm system.

16. Essential Principle No. 8 The fire protection systems shall be regularly maintained so that they are able to perform their intended function throughout the life of the building.

17. Essential Principle No. 9 There shall be adequate provision to prevent an arson attack

18. Essential Principle No. 10 The building shall be constructed that fire cannot spread into the premises from an adjoining building or other external fire source

19. Essential Principle No. 11 The building owner/occupier shall ensure an adequate standard of fire safety management throughout the life of the building

20. Essential Principle No. 12 Any fuel burning appliance and services or electrical appliance and services shall be designed, constructed and installed so as to reduce their potential as an accidental source of ignition.

21. Business survival Real cost of fire is estimated to cost the UK economy in excess of £7bn a year About a third of all businesses that suffer a disaster go out of business within 12 months

22. Core documents and guidance Insurer engagement – we like to talk Insurers have a long tradition of providing authoritative guidance on loss prevention issues RISC Authority has made available a significant portion of its technical library for free downloading - www.riscauthority.co.uk It is in the hands of brokers, risk managers, building designers and fire safety professionals to fully recognise the benefits of the Design Guide and to encourage and support its use in the field

23. RISC Authority Anticipate future events that may detrimentally impact upon the business of the UK insurance industry and invest accordingly to mitigate the consequences Identify issues currently affecting the UK insurance industry and invest accordingly to provide insurers with a means of managing the situation Maintain and improve the standard texts that underpins current insurer fire protection practice To make fire protection financially and technically attractive to the insured property owner Act as a focal point for all stakeholders with interests in fire protection Encourage commonality with government policy where prudent RISCAuthority ABIF&RSStandardsInsurersBusinessGovernment

24. Summary The cost of fire is increasing Designing for life safety, whilst important, is only part of the solution Essential principles and the Design Guide are key documents to help you achieve the total solution It is in the hands of brokers, risk managers, building designers and fire safety professionals to fully recognise the benefits of the Design Guide and to encourage and support its use in the field

25. A final thought…. Those firms who decide that risk management is not for them…… ……may find that the availability of insurance becomes more difficult!

26. © Aviva plc 2009 Thank you