Fears by insurer Zurich that pandemic-led e-commerce boom could spark rise in warehouse blazes

Our insurer partner Zurich has warned of a potential rise in warehouse blazes as a pandemic-propelled e-commerce boom sparks a surge in demand for storage and distribution space.

According to JLL, retailers are scrambling to secure more warehouse units, with demand for sites over 100,000 square feet up 64% last year – as the pandemic accelerates the shift of shoppers online.

The number of warehouses gutted by fire increased by 42% in the year 2019/20, according to Zurich’s analysis of the latest available Home Office data covering all 44 fire authorities in England.

Zurich has cautioned “outdated” rules on sprinklers could fuel an increase in warehouse blazes, harming businesses and the economy.

It has led to renewed calls for automatic sprinkler protection to be made compulsory in all new warehouses over 2,000 square metres, roughly a third of the size of a football pitch.

Government guidance currently only recommends sprinklers in warehouses of more than 20,000 square metres. This leaves Britain lagging behind other European countries where sprinklers are required in sites as small as 1,000 square metres in the Netherlands and 800 square metres in Norway.

Fire crews in England attend an average of 336 warehouse fires every year – nearly one a day. More than one in 10 blazes (14%) results in the destruction of an entire warehouse building. In the last decade, fires are recorded to have caused 99 fatalities or casualties.

Shockingly, of the 3,400 warehouse blazes attended by fire crew since 2010, half (49%) did not have alarms and just 6% had sprinklers.

Although the long-term trend has seen the number of warehouse fires fall, the cost of insurance claims has increased across the market. Zurich claims data shows the average cost of large warehouse fires is £5.9million. Losses have been driven by the demand for same and next-day deliveries which has sprouted an increase in smaller ‘last-mile’ warehouses located closer to, or in, urban centres. These are typically older buildings that pose higher fire risks.

The growth in online retail has also sparked a trend towards taller and larger ‘big box’ warehouses, with more tightly packed goods. Automation, including the use of robots – has further ratcheted up the risk and costs of warehouse fires.

As warehouse risks change, Zurich said it was committed to helping small and large firms protect their businesses and assets.

For further advice about warehouse insurance and the specialist covers available please contact GPS Insurance Brokers on 020 3907 7866.

Source: Zurich

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