Memorandum by the Association of British
Insurers (ABI) (FIR 59)
EXECUTIVE SUMMARY
The Association of British Insurers is the trade
association representing over 400 insurers who between them write
91% of the general insurance business in the United Kingdom. This
paper is being submitted in the interest of a full public debate
on the important reform programme proposed for the Fire and Rescue
Services set out in the White Paper "Our Fire and Rescue
Service" and sets out the ABI view on the key implications
for insurers and their customers.
General insurance is essential to the smooth
running of the economy. It removes significant obstacles to enterprise
and helps stimulate economic growth. In 2002 ABI members paid
out around £18.5 billion in General Insurance claims. Home
Office research puts the annual cost of fire in England and Wales
as £6.9 billion. Insurance costs make up a relatively small
proportion of the total cost of fire. Fire material damage and
related business interruption costs totalled £1.4 billion
in the UK in 2002, rising for the third consecutive year. The
cost of arson contributes £2.1 billion to the total cost
of fire, and insurers estimate that arson results in insurance
claims totalling £700 million each year in the UK, much of
which is avoidable through the use of appropriate fire suppression
and security measures.
Fire and arson losses
In 1999, there were nearly 54,000 arson crimes
but the detection rate was only 9%. This compares unfavourably
to the detection rate of 25% achieved for all crimes. The arson
conviction rate is 2.5% compared with 6.5% for all other crimes.
The public estate gives rise to a significant
proportion of fire and arson losses. Insurers believe that Best
Value audits should include an analysis of the steps taken to
protect the public estate and provide improved value to taxpayers.
We also consider that PFI and PPP guidance should require fire
prevention and suppression measures to be incorporated as standard
features.
Certain activities within the private sector
have also been identified as having disproportionate fire losses.
The insurance market functions by offering risk pools, with each
participant contributing on the basis of level of risk they bring.
The greater the probability of a claim, and the larger the likely
size of that claim, the higher the premium. Businesses may therefore
directly benefit from reduced insurance costs by controlling both
risk and impact. However there are elements of risk that can only
be influenced by external agencies, usually Government, which
also impact on insurance costs. These include social and economic
policy, building regulation and control as well as resourcing
and deployment of fire and police services.
The insured cost of domestic fire claims was
£351 million in 2002, and has risen by an average 5.2% a
year since 1988 in line with increases in average earnings and
hence personal wealth and possessions. Little real impact has
been made in reducing domestic fire property losses despite public
and private sector fire safety campaigns. Around 25% of households,
or 50% of households on the lowest income decile, have no Household
insurance.
The cost of fire falling on the poor will therefore
be under-represented in insurance claims figures. Government research
suggests that socially deprived households are 31 times more likely
to suffer fires than households in general. They may also be most
likely to lose their jobs as a result of fires in commercial premises,
and as the least skilled may be less likely to find replacement
employment quickly. Many businesses never completely recover from
large fires: as many as 90% of businesses fail within 12 months
of a major crisis, such as a catastrophic fire.
White Paper proposals
Insurers welcome the overall conclusions of
the White Paper that a modern Fire Service should achieve "increases
[in the] efficient use of resources, an increased level of safety
for the community with protection of property and the environment,
and a reduction in death and injuries". ABI supports Government
and fire authorities in undertaking a rigorous and complete approach
in analysing the full range of demands that the Service must meet,
identifying the drivers for effective deployment of resources.
Insurers note that life safety has always been, and rightly continues
to be, the first priority of the Fire Service, but stress that
the objective of protecting the economic assets and capacity of
the nation should be a key concern in future.
Despite a long term commitment by insurers to
improving fire and arson prevention only around 40% of businesses
suffering large fire losses have any fixed fire protection installed
in the building, contrasting significantly with the 81% level
achieved of homes having smoke alarms. In around two thirds of
cases fire protection is restricted to an automatic fire alarm.
Clearly current Fire Safety and Building Regulations
are not addressing the economic costs of fire, and insurance-related
incentives alone are not sufficient to persuade businesses to
take voluntary measures to protect themselves. As a result there
are significant and repeated economic losses. It will be important
to strengthen Building Regulations to address these social and
economic issues as well as protecting life. These will then support
the greater emphasis for fire prevention coming into effect under
the White Paper.
Insurers are anxious that terms such as Community
Fire Safety should include business and the voluntary sector,
rather than the narrower definition that has been used to date
in many parts of the country. Around 8 in 10 large fire losses
occur in businesses with less than £100 million annual turnover.
It is unlikely that many of these businesses have in-house risk
management expertise. This has implications for the promotion
of fire prevention in businesses, particularly as regulatory reform
leads to the new risk based approach to statutory inspections.
The move away from national statutory response
standards to a locally determined risk based approach will enable
local needs to be reflected fully in the deployment of resources.
Fire authorities and Government should draw on experience elsewhere
in designing risk identification and resource deployment measures.
For example, the National Policing Plan and local Crime and Disorder
Reduction Partnerships priorities are further informed by local
intelligence collected under the National Intelligence Model,
in determining the deployment of police resources.
In drawing up IRMPs and risk maps as predictive
tools for future fire and other emergency incidents it is important
to assess potential hazards rather than being driven by historic
events. Risk assessment should take account of the impact or damage
that will occur as well as the probability of something happening.
For many areas safeguarding the economic base of the community
will be a high priority as the social and environmental impacts
of business closures and re-locations can be significant.
The White Paper makes a commitment to invest
£43 million over the next three years in community fire safety
and arson reduction programmes, the overwhelming majority of this
in the former area. We suggest that the greater part of this funding
should be available to fire authorities and partnering organisations
such as Crime and Disorder Reduction Partnerships and Local Strategic
Partnerships to undertake initiatives targeted at priorities identified
in IRMPs and other local strategy plans. The emphasis should be
on undertaking initiatives that address the behaviours that are
giving rise to the identified problem, evaluating their effectiveness
and sharing the outcomes so that best practice can be developed
and promulgated.
Better prevention of both accidental and deliberate
fires can only be achieved where there are comprehensive and accurate
assessments of causes, with supporting legislation and regulations
being amended to address emerging problems. Improving the level
of expertise and deployment of fire investigation services will
be crucial.
Insurers recognise the need to reduce the unnecessary
burden of false alarms on limited public resources, but are anxious
to maintain the standards of protection afforded to our customers.
We believe that significant improvements can be made without recourse
to measures such as charges or fines that could jeopardise the
operation of fire prevention and detection systems. It will be
essential to ensure that measures to manage false alarms focus
on changing the behaviours and design features that give rise
to such call-outs, rather than simply resulting in systems being
switched off.
INTRODUCTION
The Association of British Insurers is the trade
association representing over 400 insurers who between them write
91% of the general insurance business in the United Kingdom. The
ABI therefore uniquely represents the views of the insurance industry,
from the largest to the smallest insurers operating in the UK
market.
This paper is being submitted to the Select
Committee on the Office of the Deputy Prime Minister: Housing,
Planning, Local Government and the Regions in response to calls
for evidence and in the interest of a full public debate on the
important reform programme proposed for the Fire and Rescue Services
set out in the White Paper "Our Fire and Rescue Service".
This paper sets out the ABI view on the key
implications for insurers and their customers. It suggests courses
of action where we feel that careful thought and active engagement
of key stakeholders need to be given in taking decisions on the
implementation of the reforms. Throughout the response we refer
to "the Fire Service" as a shorthand for the Fire and
Rescue Services.
The response covers:
— Economic and social context.
— High level analysis of the White
Paper.
— Insurers principal concerns on the
implementation of the White Paper.
— Vision, aims and responsibilities
of the Fire Service.
— Local priorities and national frameworks.
— Understanding risk and the risk based
deployment of resources.
— Promoting good practice.
— Arson and anti-social behaviour.
— Safeguarding the public estate.
THE ROLE
OF INSURANCE
General insurance is essential to the smooth
running of the economy. It enables Government and business to
allocate capital efficiently and provides a secure framework in
which companies can conduct their business safe in the knowledge
that they are protected from the financial consequences of major
risks. It removes significant obstacles to enterprise and helps
stimulate economic growth. Insurance is a key element of the infrastructure
of support for small and medium sized businesses (SMEs). There
are over 6 million such businesses in the UK. Their stability
is critical to the economy and the ability of insurers to protect
them is critical to their survival.
In 2002 (the last year for which complete information
is available) ABI members collected some £28.2 billion in
premia for General Insurance products and paid out around £18.5
billion in claims, incurring £9.4 billion in operational
expenses. In this year UK insurers made an underwriting profit
of £294 million. In previous years underwriting losses (ie
the difference between net premia and claims) was offset by investment
returns and by raising additional capital. Current investment
returns require claims to be met fully from premium income, with
the prospect of both rising insurance costs to customers and limiting
the scope for incurring any additional operating costs through,
for example, subsidising public good initiatives.
Most General Insurance contracts are short term
(often 12 months duration), offer indemnity against losses caused
by events beyond the control of the insured, and are short or
medium "tail". This last feature means that the event
triggering the claim is known to occur within the life of the
policy or shortly thereafter. For example fire damage occurs during
the life of the contract, and whilst the claim may not be settled
in full for some months thereafter a reasonably accurate measure
of the costs is known fairly quickly. Injuries caused in a motor
accident may take longer to diagnose, but settlement of claims
is usually possible within a year or two of the event.
Property (Household and Commercial) policies
typically cover burglary and theft, fraud, malicious damage, arson
and terrorism, except where these are perpetrated by the insured.
War, and in the case of Commercial policies riot and civil commotion,
are normally excluded.
Each market functions by offering risk pools,
with each participant contributing on the basis of level of risk
they bring. The greater the probability of the participant making
a claim, and the larger the likely size of that claim, the higher
the premium. Businesses may therefore directly benefit from reduced
insurance costs by controlling both risk and impact. However those
elements of risk that can only be influenced by external agencies,
usually Government, will also impact on insurance costs. Since
crime and arson levels are typically highest in the most deprived
areas of cities, insurance costs may be highest in these locations.
The risk of terrorism is considered highest in metropolitan business
districts, particularly London, and this is also reflected in
premia.
ECONOMIC AND
SOCIAL CONTEXT
Home Office research puts the annual cost of
fire in England and Wales as £6.9 billion, excluding certain
costs such as fire prevention, education and training, research,
environmental, heritage and cultural losses, local authority and
householder clean up costs, private fire brigades, arson investigation
and criminal justice costs. The cost of arson contributes £2.1
billion of this total.
Fire claims met, 1988 to 2003, £m pa
NB. No statistics available for Business Interruption
in 1988
Insurance costs make up a relatively small proportion
of the total cost of fire. Fire material damage and related business
interruption costs totalled £1.4 billion in the UK in 2002,
rising for the third consecutive year and returning to levels
similar to those in the early 1990s. Analysis of the statistics
indicates that commercial property fire and arson losses are related
to manufacturing output, with claims rising as output falls. If
this relationship holds at local as well as national level it
suggests that areas suffering net job losses, often socially deprived
areas, are likely to suffer a disproportionate number of business
fires.
Overall we estimate that arson results in insurance
claims totalling £700 million each year in the UK, much of
which is avoidable through the use of appropriate fire suppression
and security measures. Initial results from ABI research into
large commercial fire losses (material damage claims in excess
of £200,000) suggest that 45% of large losses are attributable
to arson, a proportion consistent with Government statistics for
primary fires.
Private sector commercial losses
The food sector has had a poor record over recent
years due to the high inception risk associated with cooking and
other hot processes combined with the widespread use of combustible
cored composite panels and poor fire prevention and risk management
practices. ABI research shows that losses in this sector, where
composite panels were used, have averaged £35 million per
year in the period since 1991. ABI is currently working with other
stakeholders to reduce such losses which have adversely affected
the insurability, and therefore ultimately the competitiveness,
of some parts of the UK food industry. Good building design and
operation are fundamental and yet Building Regulations and fire
safety inspections have not addressed the risks in this sector
sufficiently.
Previous poor performance in the construction
sector has been significantly improved since voluntary codes of
practice have been established. This has enabled insurers to continue
to provide cover, supporting economic activity in this sector
as well as improving the efficiency of the construction industry
itself through avoiding delays caused by fire damage. The construction
industry has responded well in managing its fire risk, although
hot working remains a significant cause of losses. Continued vigilance
is required.
Public sector losses
The public sector estate gives rise to a significant
proportion of fire and arson losses. According to Government statistics
there were 2,284 fires in schools in 2001. There are 20 arson
fires per week in the schools sector, or three every day across
the UK. School arson represents 15-20% of the value of arson insurance
claims, completely disproportionate to their representation in
the building stock. ABI research shows that one third of these
arson attacks now occur during school hours whilst pupils are
in the buildings.
Public administration buildings, homes for the
elderly and children's homes, recreational and cultural services
accounted for 6,325 fires, or 5.6% of the total in 2001. This
represents a triple burden on Council Taxpayers, who lose the
use of these public facilities, have to support Fire Services
resourced to respond to such a heavy demand, and must fund rising
insurance costs driven by these high incidence levels.
In the same year there were 637 arson fires
in hospitals in the UK. Many hospital fires are discovered and
dealt with quickly, but the potential for tragedy is worrying,
quite apart from the unnecessary drain on over-committed National
Health Service budgets. Arson accounts for just 20% of hospital
fires, suggesting that significant gains could be made through
controlling accidental fire risk.
Domestic fire costs
The insured cost of domestic fire claims was
£351 million in 2002, and has risen by an average 5.2% a
year since 1988 (the start of ABI's statistical series). Research
on flood claims at Dundee University suggests that property claims
costs rise in line with earnings due to rising affluence and value
of possessions. This would predict an average annual rise of 5.2%
over the same period, confirming this phenomenon applies equally
to fire claims.
These statistics demonstrate that little real
impact has been made in reducing domestic fire property losses
despite public and private sector fire safety campaigns. Whilst
81% of all homes have fitted smoke detectors, only 59% of homes
suffering a fire in 2001 had smoke detectors fitted.
Around three quarters of all households purchase
contents insurance, the basic form of Household cover, with nearly
nine in 10 homeowners purchasing buildings insurance, mainly driven
by mortgage lenders requirements. The Yorkshire Bank estimates
that 47% of policyholders do not regularly review their insurance
needs and hence are underinsured. An informal study by Lewes District
Council following the floods of 2000 suggested that around 15%
of households were underinsured by £5,000-20,000. These households
will therefore bear a significant proportion of the cost should
a fire occur.
However, the situation is much more severe in
the lowest income decile, with about half of households having
no insurance cover whatsoever, despite the promotion of low cost
schemes such as Insurance with Rent for tenants of social landlords,
or similar products for Credit Union members. Only around half
of all local authorities make Insurance with Rent schemes available
to their tenants, whilst a 20% uptake rate is considered relatively
successful where schemes are provided.
These schemes are a significant attempt by the
insurance industry to address social and financial exclusion,
since socially deprived areas are also those with the heaviest
crime burden. A combination of high crime, and accidental and
arson fire incidence drives up premiums in a competitive market
operating risk based pricing. Insurance with Rent schemes attempt
to reduce these costs to policyholders through administration
cost sharing with the local authority and designing the product
to meet the needs of this customer group, for example by reducing
total value of cover, and allowing small, regular payments along
with rent, at familiar institutions.
The cost of fire falling on the poor will therefore
be under-represented in insurance claims figures. Government research
suggests that socially deprived households are 31 times more likely
to suffer fires than households in general, and the poor are 16
times more likely to die in a fire than an average citizen. The
National Community Fire Safety Centre has shown that social classes
D and E are less likely to own smoke detectors, and the British
Crime Survey 2000 suggested that whilst this link was not conclusive,
it was the case that Asian and Black households were much less
likely to own smoke alarms than White households.
The most vulnerable in society face the highest
risk, are the least prepared and have the least financial protection.
They may also be most likely to lose their jobs as a result of
fires in commercial premises, and as the least skilled may be
less likely to find replacement employment quickly.
Uninsured losses
The differences between total economic costs
of around £7 billion pa in 2000 and insured losses of a little
under £1 billion in the same year, amount to around £6
billion each year. These substantial costs to society are borne
by individuals, businesses and the voluntary sector, schools,
local authorities and communities, or by the taxpayer.
There are various estimates of the impacts of
fire and arson on businesses, after insurance claims are paid.
Many businesses never completely recover from fires, losing regular
orders, key staff or other resources (eg customer lists), and
go out of business within three years. Touch Ross estimate that
as many as 90% of businesses fail within 12 months of a major
crisis, such as a catastrophic fire. These facts, together with
the findings that socially deprived areas suffer a greater probability
of fire mean that a downward spiral can quickly be established.
The impact on employment and local incomes could then have a further
effect on domestic vulnerabilities to fire.
Where householders are uninsured or underinsured
the effect of a fire, even a small fire in the case of poor families,
is to take on debt in order to replace lost essentials. Research
by the Citizen's Advice Bureaux suggests that the most common
causes of debt are living long-term on a low income, over-commitments
and job loss; but many people considered their situation arose
from a combination of factors. A catastrophic event could quickly
worsen an already difficult situation. The Social Fund or the
less formal sources of credit are the main sources of emergency
finance for these families and pensioners.
HIGH LEVEL
ANALYSIS OF
THE WHITE
PAPER
At the time of the report of the Independent
Study into the Fire Service (the Bain Report) insurers welcomed
the overall approach, whilst calling for more consideration to
be given to the economic and consequent social costs of fire.
The basis for these concerns is set out above.
Insurers therefore welcome the overall conclusions
of the White Paper that a modern Fire Service should achieve "increases
efficient use of resources, an increased level of safety for the
community with protection of property and the environment, and
a reduction in death and injuries". We support Government
and fire authorities in undertaking a rigorous and complete approach
in analysing the full range of demands that the Service must meet,
identifying the drivers for effective deployment of resources.
Insurers note that life safety has always been, and rightly continues
to be, the first priority of the capacity of the Fire Service,
but support the objective of protecting of the economic assets
and capacity of the nation will be a key concern in future.
A prosperous economy not only generates the
funding for first class public services, but the links between
economic decline and rising fire costs suggest that improved prevention
will only be possible where economic growth and regeneration are
achieved.
The ABI fully supports the proposals set out
in the White Paper to:
— Shift the emphasis of the Service
more heavily towards fire and arson prevention;
— Take a risk based approach to deploying
resources;
— Review fire and related legislation
to ensure that it is easier for business to comply, whether in
constructing or occupying buildings and to design safety into
our buildings;
— Incorporate non-fire emergency activities
formally into the defined role of the Service, and as a basis
for funding;
— Ensure that the Service is properly
equipped with the right people and skills to deal with fire and
other emergencies such as terrorism.
INSURERS PRINCIPAL
CONCERNS ON
THE IMPLEMENTATION
OF THE
WHITE PAPER
Whilst the White Paper makes considerable progress
on the Bain recommendations in recognising the economic impacts
of fire, and the need to protect businesses and economic capacity,
this is not carried through in all areas, with the majority of
focus on life safety and avoiding injury. Insurers fully support
the need address the human costs of fire, but are anxious that
terms such as Community Fire Safety are interpreted as including
business and the voluntary sector, rather than the narrower definition
that has been used to date in many parts of the country.
The guidance to fire authorities on the preparation
of Integrated Risk Management Plans (IRMPs) explicitly lists as
objectives serving all sections of society fairly and equitably
by:
— Reducing the number of fires and
other emergency incidents occurring;
— Reducing loss of life in fires and
accidents;
— Reducing the number and severity
of injuries in fires and other emergency incidents;
— Reducing the commercial, economic
and social impact of fires and other emergency incidents;
— Safeguarding the environment and
heritage (both built and natural); and
— Providing value for money.
However in the White Paper the list is abbreviated
to:
— Reducing the incidence of fires;
— Reducing the loss of life;
— Reducing the number and severity
of injuries occurring in fires and other emergencies;
— Safeguarding the environment and
protecting the natural heritage; and
— Providing communities with value
for money.
We are concerned that, in implementing the White
Paper, the fuller list should apply.
VISION, AIMS
AND RESPONSIBILITIES
OF THE
FIRE SERVICE
Insurers support the Government's vision for
the Fire Service as proactive in preventing fire and other risks,
supporting the wider social and economic inclusion agenda, having
effective institutions, being well managed and efficient and committed
to developing and adapting to changing circumstances.
Insurers also support the Government's stated
objective for the Service as reducing the loss of life, injury,
economic and social cost arising from fires and other hazards.
ABI considers that there are a number of key
Government objectives to which the Service should contribute,
notably:
— Secure an innovative, fair dealing,
competitive and efficient market in financial services (HM Treasury);
— Increase the productivity of the
economy (HM Treasury);
— Expand economic and employment opportunities
for all (HM Treasury);
— Raise the levels of social inclusion,
neighbourhood renewal and regional prosperity (ODPM with HM Treasury
and DTI);
— Promote enterprise, innovation and
increased productivity by encouraging successful business start-ups,
by increasing the capacity of business including SMEs, to grow,
to invest, to develop skills, to adopt best practice, and to exploit
opportunities abroad, recognising the development of the knowledge
economy and taking account of regional differences (DTI);
— Reduce crime and the fear of crime,
including organised and international crime (Home Office);
— Raise the quality of life for all
in urban areas and other communities (ODPM).
LOCAL PRIORITIES
AND NATIONAL
FRAMEWORKS
The move away from national statutory response
standards to a locally determined risk based approach will enable
local needs to be reflected fully in the deployment of resources.
Whilst understanding the wish to enable fire authorities to make
decisions that meet these local needs, it is perhaps relevant
that Home Office has revised their approach to Crime and Disorder
Reduction partnerships, which now set local priorities overlying
rather than replacing nationally determined priorities set out
in the National Policing Plan. The Government's decision to draw
together a National Framework to act as a benchmark for fire authorities
is to be welcomed, but we note that the White Paper only extends
this to value for money considerations, with no benchmarking of
operational performance.
UNDERSTANDING RISK
AND THE
RISK BASED
Experience elsewhere in Government should be
drawn on in designing risk identification and resource deployment
measures. For example, the National Policing Plan and local Crime
and Disorder Reduction Partnerships priorities are further informed
by local intelligence collected under the National Intelligence
Model, in determining the deployment of police resources. This
forms a useful template for the adoption of risk-based deployment
of the Fire Service, which will need to be founded on good "intelligence"
or knowledge of dynamic risks.
Understanding risk involves the prediction of
future events as well as full knowledge of past events. The latter
may or may not assist in the former either because of the dynamic
nature of the risk (eg change of use in an industrial estate,
change of practice or process) or because past events have not
occurred in some high risk areas. Historic serious fires should
be defined as those resulting in fatalities or serious injuries,
serious economic (and consequently social) or environmental damage.
Other indicators such as social deprivation, licensing requirements
by other statutory authorities or crime patterns will be needed
to identify likely patterns of future events.
In drawing up IRMPs and risk maps as predictive
tools for future fire and other emergency incidents it is important
to assess potential hazards rather than being driven by historic
events. Change of ownership, use or process, or upgrading of fire
prevention measures can all alter the likelihood of future events.
Historic data is useful in defining types of hazard and, if near
misses are included, measuring current effectiveness but it does
not predict where the next fire will be, only the types of properties
more likely to suffer a fire. Other geographic information will
identify areas with concentrations of high, medium and low risk
properties.
Risk maps need to cover the full range of hazards
brigades might be asked to respond to, without any value judgements
being applied. ("Risk" is often used differently by
different organisations; insurers take account both of the probability
of something happening and the impact or damage that will occur
when it happens). A fire in a factory that is a significant local
employer, or the only doctor's surgery in a small town, or a struggling
sub-post office, will all have much greater impacts than the value
of reinstatement might imply. Businesses operating with tight
margins may be highly adversely affected by alterations in cover
that lead to a re-assessment of risk and hence insurance pricing,
since even modest increases in costs can have a significant impact
on profits.
Aggregations and co-incidences of different
types of risk will necessitate different responses and may change
the priority given to a neighbourhood. An industrial estate with
small contiguous units may be low or high risk, depending on type
of business. A small welding shop or agricultural supplies store
may be relatively low risk in themselves, but combined alongside
a soft furnishings maker and paper goods supplier the risks might
change.
Decisions on priorities for resource deployment
should be made once the nature, size and distribution of hazards
are known, rather than pre-determining the type of hazards worth
mapping. For many areas safeguarding the economic base of the
community will be a high priority as the social and environmental
impacts of business closures and re-locations can be significant.
FIRE PREVENTION
Insurers invest around £0.5 million each
year in fire prevention research, EU and UK standards work and
the development and promulgation of sourcebooks such as the Loss
Prevention Council Design Guide. The outputs from these activities
inform insurers' promotion of fire prevention in the form of advice
to customers, contractual terms and conditions, and with economic
incentives. ABI research suggests that in nearly half (48%) of
large loss claims, one or more of the contractual terms were not
being met by the insured. In such circumstances claims may be
reduced or repudiated. Despite these market signals (contractual
and financial), policyholders continue to demonstrate inappropriate
behaviour as regards fire prevention.
In addition insurers support the activities
of the Fire Protection Association, an independent not-for-profit
organization offering fire prevention consultancy, training and
literature, and the Arson Prevention Bureau, a public good body
wholly funded by the insurance industry. Both of these bodies,
together with individual insurance companies, in turn support
the activities of ODPM's Arson Control Forum, whilst FPA have
also been active on the Fire Safety Advisory Board, activity that
is largely supported through insurer funding.
ABI recently researched the fire loss experience
and fire safety management of premises containing combustible
composite panels, commonly used due to their insulation properties.
In addition to making the findings of this research freely available
on the ABI website, the Association held seminars in summer 2003
to promote better design and management of these premises and
to facilitate private and public sector initiatives to draw up
codes of practice and sector guides aimed at reducing fire losses.
Despite this long term commitment by insurers
to improve fire and arson prevention, initial results from ABI
research indicate that only around 40% of businesses suffering
a large fire loss have any fixed fire protection installed in
the building, contrasting significantly with the 81% level achieved
of homes having smoke alarms. This protection is limited to an
automatic fire alarm in one third of businesses (31%). Around
8 in 10 large fire losses occur in businesses with less than £100
million annual turnover. It is unlikely that many of these businesses
have in-house risk management expertise. This has implications
for the promotion of fire prevention in businesses, particularly
as regulatory reform leads to the new risk based approach to statutory
inspections.
The adoption of modular building techniques
currently being promoted by ODPM for low cost housing projects
give rise to concern. The construction methods have variable fire
resistant qualities and rely on good finishes, which must remain
intact and undamaged during occupation. The cost of repairing
such constructions after a fire can be significant, particularly
where the structure has to be disassembled in order to "slot
in" in a new replacement module.
Clearly current Fire Safety and Building Regulations
are not addressing the economic costs of fire, and insurance-related
incentives alone are not sufficient to persuade businesses to
take voluntary measures to protect themselves. As a result there
are significant and repeated economic losses. It will be important
to strengthen Building Regulations to address these social and
economic issues as well as protecting life. These will then support
the greater emphasis for fire prevention coming into effect under
the White Paper.
PROMOTING GOOD
PRACTICE
The White Paper makes a commitment to invest
£43 million over the next three years in community fire safety
and arson reduction programmes, the overwhelming majority of this
in the former area. ABI understands that much of this funding
is in fact held by the Central Office of Information as part of
an advertising budget. We doubt that this is the most cost effective
means of using scarce resources to promote good practice and would
be interested to see any evaluations of the impact of past campaigns
in reducing the economic costs of fire.
We suggest that the greater part of this funding
should be available to fire authorities and partnering organisations
such as Crime and Disorder Reduction Partnerships (CRDPs) and
Local Strategic Partnerships to undertake initiatives targeted
at priorities identified in IRMPs and other local strategy plans.
The emphasis should be on undertaking initiatives that address
the behaviours that are giving rise to the identified problem,
evaluating their effectiveness and sharing the outcomes so that
best practice can be developed and promulgated.
In 2000 Zurich Municipal and the Arson Prevention
Bureau, which is sponsored by the UK Insurance Industry through
the Association of British Insurers, launched a pilot project
in Nottingham aimed at raising awareness of arson in schools.
Jointly supported by Nottingham City Council, Nottinghamshire
Fire and Rescue Service and Nottinghamshire Police, the objective
of the project was to address local arson problems. Nottinghamshire
suffers one of the highest rates of arson in the country at 186
cases per 100,000 head of population.
This innovative project included a specially
commissioned play aimed at teenagers highlighting the consequences
and risks of arson, followed up by workshops. Supporting teaching
materials were also developed. Evaluation showed that, whilst
pupils did not understand arson to be a serious problem or the
consequences of fire prior to the project, following the programme
82% accepted that arson was serious and concerned everybody. Teachers
rated the programme as excellent in maintaining interest and considered
the teaching material as user friendly and relevant.
The project is now being rolled out in parts
of Scotland and Yorkshire with further support from Zurich Municipal
and the APB.
ARSON AND
ANTI-SOCIAL
BEHAVIOUR
In the report "Respect and Responsibility—Taking
a Stand Against Anti-social Behaviour" the Home Office identified
arson as one form of anti-social behaviour. Arson is largely unrecognised
in CRDP priorities, in contrast to the broader question of anti-social
behaviour. Until recently, in many areas police resources were
only put into investigating, let alone taking preventative action
against, arson cases where a death occurred. This is beginning
to change with the adoption of joint Arson Task Forces in many
areas. Since arson accounts for nearly half of all fires, it is
right that this should be the focus of nearly half of fire brigades
activities and yet to date it has been viewed as something that
can only be supported if additional, often piecemeal, funding
is secured. Arson represents a much smaller proportion of total
crime—about 1% of incidence, but clearly a higher value
in terms of impact—but it is highly doubtful that a matching
proportion of police resources are deployed in arson prevention
and investigation.
SAFEGUARDING THE
PUBLIC ESTATE
Local authority and NHS estates are extensive
and represent significant proportions of properties in certain
areas. Indeed the public sector estates are essential resources
for communities as well as providing employment for around 20%
of the active economy. There were nearly 12,000 fires in public
buildings in 2001, a quarter of them in hospitals and a similar
number in recreational and cultural buildings. These figures compare
with a total of 18,000 fires in industrial and commercial premises
and 1,200 agricultural buildings. Adequate management of fire
risk in the public estate could therefore make a significant contribution
to reducing non-domestic fires.
We think that Best Value audits should include
an analysis of the steps taken to protect the public estate and
provide improved value to taxpayers. We also consider that PFI
and PPP guidance should require fire prevention and suppression
measures to be incorporated as standard features.
FIRE INVESTIGATION
Insurers support the move towards regionally
based Fire Investigation Teams (FITs) in those areas where individual
brigades cannot support the level of training, dedication of resource
or realistic workloads to ensured currency of expertise. Better
prevention of both accidental and deliberate fires can only be
achieved where there are comprehensive and accurate assessments
of causes, with supporting legislation and regulations being amended
to address emerging problems.
The UK Forum of Arson Investigators was set
up in 1995 by the Arson Prevention Bureau, sponsored by the UK
Insurance industry though the ABI, to enable investigators from
public and private sector organisations to share best practice,
experience and information with a view to improving the investigation
and prosecution of fire crime. The two hundred or so members include
police, fire service and insurance investigators, forensic scientists,
legal experts and fire and security managers in industry.
Recent activities including a training workshop
on investigation techniques, using staged arson scenes, and video
and expert feedback of the firesetting and fire development to
demonstrate the accuracy of trainee's investigation conclusions
and shortcomings in techniques. In May 2003 the Forum ran a workshop
providing prosecutions training with realistic courtroom simulations
before a retired High Court Judge, and with practising criminal
barristers leading the cases for prosecution and defence. As a
not-for-profit organisation the APB provides this CPD-qualifying
training on an at-cost basis, offering excellent value for money
as well as establishing and reinforcing professional networks.
A good understanding of the causes of fire requires
the deployment of appropriate expertise, with front line firefighters
being forensically aware, preserving evidence wherever possible
and having the skills necessary to recognise when more specialist
investigative support needs to be called in. These specialist
FITs need to be able to draw on forensic and scenes of crime experts
in turn, and need to be supported by nationally linked information
and statistical networks and appropriate and recognised training
and education. They should be incentivised by proper career paths,
recognition and rewards, utilising their expertise for a significant
proportion of their careers.
Fire investigation becomes even more crucial
in arson cases. The number of arson cases is increasing at a startling
rate and has more than doubled over the past decade. In 1999,
nearly 54,000 arson crimes were recorded by the police in England
and Wales, although only 9% of these crimes were detected. This
detection rate compares unfavourably to the detection rate achieved
for all other crimes, which in 1999 stood at 25%. Of the number
of arson crimes which were detected, approximately 1,290 resulted
in a conviction. This results in a conviction rate of 2.5% which,
as with the detection rate, compares unfavourably to the conviction
rate of all other crimes, which was 6.5%.
Even these statistics understate the real problem.
Only a proportion of the fires attended by the fire brigade and
which they believe to be deliberate, are recorded by the police
as arson offences. This discrepancy is the result of the differing
definitions used by the respective forces as to what constitutes
arson.
The Arson Prevention Bureau, sponsored by the
UK Insurance industry through the Association of British Insurers,
sponsored Crimestoppers to work with fire brigades from Berkshire,
Buckinghamshire, East Sussex, Hampshire, Isle of Wight, Kent,
Oxfordshire, Surrey and West Sussex in the largest ever collaboration
between brigades on a single initiative to reduce fires.
Launched in August 2001, the scheme displays
posters at suspected arson sites seeking information via Crimestoppers
free phoneline 0800 555 111, and offering rewards, where this
leads to arrest and conviction. Fire tenders also carried publicity
for the scheme. Evaluation indicated an overall increase of 41%
in the number of arson calls and a doubling of actionable calls
to the Crimestoppers' number.
FALSE ALARMS
Although the precise balance varies from year
to year the Fire Service responds to roughly the same number of
false alarms as real fires. The level of false alarms has fallen
since a peak of 507,000 in 1995 but this clearly remains an unacceptable
diversion of Fire Service resources. Insurers recognise the need
to reduce this unnecessary burden on limited public resources,
whilst wishing to maintain the protection afforded to our customers.
In considering ways to reduce this nugatory
activity it will be essential to devise methods that do not also
lead to undesirable outcomes such as the disabling of vital safety
systems. We believe that significant improvements can be made
without recourse to measures such as charges or fines that could
jeopardise the operation of fire prevention and detection systems.
Insurers would be keen to engage in discussions on alternatives,
perhaps drawing in part on the agreement with ACPO on responding
to repeated false intruder alarms, amended to reflect the Health
and Safety issues associated with fire alarm systems.
Almost 60% of false alarm call-outs to the fire
service are attributed to apparatus failures. It is notable that
recent detailed research on the causes of false intruder alarms
by the National Security Inspectorate has found that operator
error was the source of many problems. Errors included using the
wrong entry/exit route or deviating from the correct route, taking
too long to disarm the system or inputting the wrong code. Equipment
failure was the next most common cause, although 95% of movement
detectors returned to manufacturers as faulty were found to have
no fault when checked. This implies that better product design
(that is, designs that minimise operator error) and training may
be the most effective means of reducing false alarms. Fines are
likely to lead to systems being switched off, rather than encouraging
interventions that change behaviours. Decisions to withdraw cover
from frequent offenders could put life as well as economic capacity
at risk.
NON-FIRE
ACTIVITIES
Activities such as rescuing people from vehicles
and other non-statutory tasks now account for a significant minority
of Fire Service resource. Responsibilities under the Civil Contingencies
Bill, when it becomes law, could add to this diversification further.
Insurers consider it essential that the Service has adequately
trained people with the correct skills and equipment to undertake
these diverse roles, with specialisations where appropriate. ABI
has responded to the consultation on the draft Civil Contingencies
Bill and will continue to contribute to this debate.
CONCLUSIONS
The Fire Service must be able to respond effectively
to fires and other emergencies, drawing on appropriately skilled,
motivated and resourced staff. Insurers consider the White Paper
to be a solid basis for achieving this through risk based resourcing,
greater emphasis on prevention and working with other stakeholders
to achieve greater action to limit the economic, social and environmental
costs of fire and other emergencies.
The principles set out in the White Paper now
need to be implemented with care, ensuring that the means do not
frustrate the ends.
It is vital that businesses, particularly small
and medium sized enterprises, continue to receive support and
advice, since they will have little risk management expertise
in house and may not be resourced to seek fee-based consultancy.
The impact of reduced cover or fire prevention advice to SMEs
could have significant impacts throughout communities.
The efforts of the Fire Service should be underpinned
by modern, relevant Building Regulations that also address economic
and social issues, and do not focus solely on life safety.
Resources devoted on improving performance in
safeguarding domestic properties will be crucial in reducing the
number of deaths caused by accidental and deliberate fires, since
the majority of these occur in the home. Certain sectors of society
are particularly vulnerable and will require support that actually
changes behaviours and outcomes. Advertising campaigns have not
proved successful in achieving this in the past.
The future of our Fire and Rescue Service depends
on a prosperous economy and society just as society depends on
an effective Fire and Rescue Service.
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