The Costs of Fire

Fire has been a scourge for as long as humans have lived in cities. In the UK, the Great Fire of London of 1666 destroyed the homes of 70,000 residents (out of a population of 80,000); it was widely believed to have started in a bakery. And while commercial fires don’t all result in destruction of this scale, they remain a costly problem. The Regulatory Reform (Fire Safety) Order 2005 became law in 2006, the most sweeping legislation yet released to deal with the problem of commercial and business fires. By making businesses accountable for fire safety compliance, the incidence of commercial fires is expected to drop, while the fires that do occur should be less destructive in terms of property destruction, loss of business and injury. Business owners and managers need to understand the importance of fire legislation compliance and the need to have a fire risk assessment (FRA) conducted. The costs of failure to do so are many: Firefighting The cost responding to fires in the UK is enormous and any effort that reduces the number of incidents requiring the dispatch of Fire and Rescue Services is a good thing. In 2008, responding to 250,000 fire calls (plus over 300,000 false alarms) cost £1.8 billion. The average cost per incident amounted to £3,186 altogether. Damages Fire in a home can cause expensive damages, but when fire strikes a business, the costs quickly escalate due to expensive equipment kept at the premises, inventory and other factors. Even a relatively minor fire can be costly. The average insurance claim on a commercial fire in 2009 was £21,000; that’s nearly three times the amount for the average home fire. UK insurers are now paying out over £3.5 million every day to cover damages directly caused by fire. Loss of Business For a business, perhaps even more critical than the physical damage caused by a fire is the disruption a fire can cause. What happens if a retail store is shut down for several weeks in order to repair fire damage? Or if a factory has to cease production because a fire damaged a critical system. What happens to an office when its paper files go up in flames and the computers are all reduced to slag? Being out of business for even a few weeks can mean permanent loss of business and customers, something that many companies never fully recover from. When economic damage of this nature is factored into fire cost equations, the numbers quickly escalate. In 2008, England alone was calculated to have suffered £3.3 billion in total fire damages. Loss of Life and Injuries Fire not only causes physical damage to buildings and contents, it can cause injury or even loss of life for employees and fire fighters. In 2007, the death toll attributed to fires in the UK stood at 443 victims, along with six firefighters. Each death causes tremendous personal loss among family members, but also has monetary cost through lost wages, insurance settlements and lawsuits. For every death caused by fire, there are many more injuries, which also cause suffering and lost productivity while racking up expensive treatment costs. Penalties The Regulatory Reform (Fire Safety) Order 2005 was intended to replace in excess of 70 pieces of existing fire safety legislation in an attempt to reduce the annual toll of fire on the UK. As part of this legislation, penalties were introduced for businesses and business owners that failed to carry out a fire safety risk assessment and implement a fire risk management plan. These penalties include fines and the possibility of imprisonment. To date, the largest fine assessed against a company for failure to comply with the fire safety legislation has been £240,000. Fire Risk Assessments are the key to preventing fire in the first place, and to minimizing any damage or injury should fire strike a business. By working with an experienced provider who can undertake a fire risk assessment and provide a certificate of compliance, business owners are covered in the event of inspection by fire authorities. Doing so also satisfies requirements set by most insurance companies. Ideally, the provider will also include additional fire safety services as part of the assessment: PAT testing (to reduce risk of fire from portable appliances) an action plan (to address any shortcomings) and a fire evacuation procedure.