Fire insurance and the RRO

[Peter R]

A few thoughts on how the RRO may influence the fire insurance of buildings.

There is now the legislative duty on premises occupiers to produce a written fire risk assessment which could also assist them in securing realistic insurance cover, and maintaining that insurance. The fire risk assessment should identify all potential hazards, the associated risks and actions taken.  Insurers assess risk on the basis of the information provided. In general, insurance contracts are agreed and renewed on the basis of ‘utmost good faith’. Therefore, the facts disclosed need to be true.

Utmost good faith not only means that the facts disclosed must be true, but also includes an obligation to inform the insurer if the facts could influence an insurer’s judgement in accepting or declining a business risk, or in fixing the premium and terms and conditions of the contract. This obligation arises independently of any specific request made by the insurer or insurance broker.

If a fire risk assessment highlighted a risk should the occupier inform its insurance company?

If the Fire Service identifies a fire risk and starts any form of enforcement, should the occupier inform the insurance company?

If any of the above happens could insurance cover be compromised?

A general thought. Is anyone aware of insurance companies[brokers] asking for sight of a company’s fire risk assessment as part of the process of setting a premium?

[Chris Houston]

The need for a written risk assessment is not new.

The risk assessment will mainly deal with life safety.  Fire insurance premiums are based on property risk.

It is not normal practice to ask for Fire Safety Risk Assessments prior to cover, but it is normal to ask to see them when larger premises are surveyed.  This is because the insurance surveyor can use this as a way to tell how good the risk management is, or to make sure that liability (injury) risks are being properly managed.

The main factors that influence the price of insurance will be location, trade (what they do and store in the building), exposure (will your neighbours set you on fire), fire protection and detection, the type of construction and loss history.

[John Webb]

There was concern expressed in October last year when some people were approached by some less-scruplous companies claiming that if they didn't get their FRA done ASAP, their insurance cover would be invalid.
The Eccesiastical Insurance Group, who cover all the CofE churches in my area, made clear in November 2006 that the lack of an FRA did not invalidate the insurance as far as they were concerned, but they hoped people would not delay carrying out the FRA too long, or words to that effect.
Insurers do have an interest in the life risk - it is they who will pay out if someone is injured or killed as a result of a fire in premises insured with them. So the premiums do have more than just property considerations when they are being arranged.

[Chris Houston]

John,

This would be a public liability insurance claim, not a fire policy claim.

Fire policies relate to buildings, liability policies relate to people.
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I work for an insurer.  I am always saddened if I meet a client without a FRA and I always ask them to do it.  But it's not my job to enforce the law and often it will just be a recommendation.  However, if we insure liability and I see something that could significantly increase the injury risk, I will make it a requirement of insurance.  

These tend to be things dealt with after the insurance has started, if they had enough issues giving concearns we might increase their premium to motivate them to resolve the issues.  But this sort of thing is not normally discussed before insurance is taken out.
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Rightly or wrongly, the cost of public liability insurance will be determinded by the loss history.  There are so many other things that injure people other than fire - sllips trips and falls mainly.  Injury from fire is way down the list of things that cost insurers money.

[John Webb]

Chris,
Your comments are noted. The Ecclesiastical Insurance Group (EIG) were making clear that if you get sued because someone was injured (not necesarily due to fire) EIG customers were still covered by their public liability insurance. The implication was that the unscruplous companies were claiming that if you hadn't carried out your FRA you could find your public liability insurance doesn't cover you for any injury however caused, which as you say is a separate issue.

EIG have produced a series of booklets on Fire, General H&S@W, Security etc. for some years for their customers; they have been very useful if not perfect.

[Mike Buckley]

It seems to me that there are two points here, one is whether the insurance companies will base their decision to insure on the existance of a FRA and the indications are that they don't.

The more worrying aspect is that there are people who are claiming that insurance companies are doing this as a frightener to get business. The follow on line being that they will do a FRA for the business and I can guess at the cost and quality of the FRA.

This does link into other threads where the criteria for a "fire consultant" was discussed and the need for regulation within our industry.

[Chris Houston]

Any decent insurance company will have surveyors/engineers/consultants (what ever you want to call us) who provide advice on these sorts of things to their customers.  After all, it is in the insurers interests that their clients manage risks properly.