risk insight, strategy and control authority reducing insurable risk through research, advice and...

RISK INSIGHT, STRATEGY AND CONTROL AUTHORITY

Reducing insurable risk through research, advice and best practice

Chris HanksFPA and RISC Authority Chair



The Insurer’s View



Introducing the FPA and RISCAuthority

Mission is to identify current and future issues that may

detrimentally affect UK property Insurance and to

manage and mitigate the consequences.• Provide text that underpin current insurer fire

protection• Make fire protection financially and technically

attractive to the insured property owner• Focal point for all stakeholders interested in fire

protection• Encourage commonality with government policy



Supported by 85% of UK Property Insurers



And maybe Insurers have to get their “skin in the game”

• Insure £20 trillion of Property Assets• There are NO property assets in the UK WITHOUT Insurance• For a £10m value building we charge £4k premium and 50% of that

goes in Brokers or Managing Agents Fees• A capital intensive business for every £100 of turnover we need £50 of

capital.• We exist on a margin of 3%• We rely on history, fact, knowledge and experience to inform the risks

we take on• We rely on most clients not making a claim. This is not a savings

account but where the losses of the few are shared by the many

Change and Uncertainty are our nemeses



But don't cry for Insurers!

Long term we will not lose money or waste and destroy

our capital.

But the consequences are:• We will raise premiums very significantly• Refuse to provide cover for some buildings, some

types of construction, some trades, some areas etc• Exit the market

None of this is necessary if we work collaboratively and sensibly together



Welcome Reduction in Number of Fire Claims

2004 2005 2006 2007 2008 2009 2010 2011 2012 201320

40

60

80

100

120

140

Commercial Claims

Total Claims

Year

No

. o

f C

laim

s (0

00s)



But Financial Losses Remain Stubbornly High

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013400

500

600

700

800

900

1,000

1,100

1,200

1,300

1,400

Commerical Fire Claims

Total Fire Claims

Year

Gro

ss I

ncu

rred

Cla

im (

£M)



Factors Affecting Size of Loss• Changes in the Built Environment

• Larger buildings,• Greater use combustible materials

• Loosening regulatory environment• Fire (Value) Engineering• Loss of Local Building Acts

• Changes in fire and rescue response• IRMP• Tightening fiscal environment

• Unwelcome bias towards life safety and evacuation over

property preservation and economic recovery



Emerging Issues

Timber Frame Waste and Recycling



Emerging Issues

10

Many modern building techniques use a great deal of combustible material in their structure



Green credentials over fire performance?

11

Emerging Issues



FPA ‘Building of the Year’

• Non-combustible materials of construction (properly ‘non combustible’)

• Excellent compartmentation

• Little or no reliance on ‘systems’ (human or mechanical) to deal with fire

12

http://doublebhomestead.files.wordpress.com/2012/01/bunker-point-du-hoc.jpg



Challenges to Resilience in the Built Environment

• Fire (Value) Engineering• Budget constraints on Fire and Rescue Services• Call challenging of AFA’s• Repeal of fire safety provision from local acts• Void buildings / social unrest• Reduced Inspection (Fire Certificates)• Low sprinkler provision in comparison to our EU cousins• MMC (Combustible structures, insulation, cladding, voids)

Resilience requires good decision making and reduced reliance on others

13



And what are Key Stakeholders doing about this?

Firstly who are these Key Stakeholders?• The Government and Regulators• Insurers• Fire Protection Industry• Sprinkler manufacturers and Installers• Fire Authorities• Architects, planners• Company Directors, business owners and property owners

Look at the first 2 categories and focus more specifically on the role of Sprinklers



The Government’s Role

• They do not participate!

• Sprinklers in buildings over 20,000 sq m (big deal)• Local Acts now removed – so no help there either• Reducing regulation to encourage low cost building

• Their remit stops at evacuation – there is no further interest in how the building, environment, business, or community suffers beyond this point.



The Insurer’s Role

• Obvious vested interest• Provision of tools to support the enlightened• Provision of expertise to support the enlightened• Favourable terms for better risk but wimpish in

penalising poor risks

But:• It can be a hard-sell• Open competitive market with surplus capital means

short term options for clients to move• Portfolio cover



Why Do Insurers Like Sprinklers?• Reliability – few sprinklered buildings appear in the

large loss statistics• Trust

• Tightly specified standards• Third party certificated equipment• Highly qualified installers• Robust maintenance schedules

• Risk• Proven Technology (Victorian Engineering?)• Resilient

• They save insurers and their customers money



Sadly and Increasingly Insurers Confidence is Falling

• Deviations from insurer rules• Watering down of standards

• Value engineering• Claims of equivalence with alternative technologies

• Test performance is no guarantee• Equivalency – Performance & Reliability

• Confusion between life safety (evacuation) and property protection (building resilience) standards

• No other form of fire suppression has the history or performance of sprinklers



What about the Other Stakeholders

• Despite many good intentions, improved collaboration with CFOA etc, there are too many vested interests and too little collaboration and too many obstacles in the way of significant improvement in current situation

Insurers believe that:• There needs to be more Sprinkler protected properties in the UK• We need to make sure that protection is appropriate not just arbitrary• We need to overhaul some of the costs and problems associated with

Sprinkler installations • We need to Government to force appropriate sprinklers into large

commercial premises• We need a sensible an collaborative dialogue amongst the

stakeholders to achieve this

So we are making some proposals



Collaboration for Resilience

• A new gold standard • Recognised rules for protection of property• Insurer led – but involving stakeholders

• trade, end-users, enforcers, certification bodies etc

• Pan European• Defined timescale• Offered to CEN



RISCAuthority - Blue Skies Group

• Explore measures to increase palatability of sprinklers without detriment to reliability

• Determine scope to introduce alternative measures• Insurers, trade, regulators – facilitated by FPA

• EG – Provision of underground tanks



So what does this all mean?

• Reduction in number of claims• Steady rise in aggregate cost and much larger claims• De-Regulated Environment• Changing risk landscape• Competitive insurance market• High level of trust in sprinklers• Concern at claims of equivalence

And we are proposing some change



We are proposing 2 New Initiatives

• New Property Protection Standard• RISCAuthority Blue Skies Group

If we believe we need to improve the built environment

in the UK and that Sprinklers are an obvious part of

the solution then the question is

IF if we are not going to do this, WHO IS?

IF we are not going to do this now, then WHEN?



London Road, Moreton In Marsh , Gloucestershire GL56 0RH

T: +44(0)1608 12500 F: +44(0)1608 812501

E: [email protected] www.riscauthority.co.uk

Thank you

Chris Hanks

All guides and documentation referred to freely available from

www.RISCAuthority.co.uk

https://robust.riscauthority.co.uk/

www.theFPA.co.uk

http://www.riscauthority.co.uk/



http://www.thefpa.co.uk/

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