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Hot summers bring about a heightened risk of fire incidents, presenting a significant danger to human lives, businesses, and the environment. The combination of scorching temperatures, dry vegetation and other climate factors creates perfect conditions for fires to ignite and spread rapidly.

Implementing effective strategies to manage fire risk and promoting fire safety measures can help protect your staff and business, while considering the right insurances will help you recover if disaster strikes.

With the Bureau of Meteorology recently declaring an El Niño event and a positive Indian Ocean Dipole, Australia's 2023/24 summer is forecast to be the hottest and driest weather experienced since the 'Black Summer' of extreme bushfires in 2019/20.

Common causes of fires in commercial premises

Commercial fires pose a significant threat to businesses, employees and property, often resulting in devastating consequences.

Understanding the common causes of these fires is crucial for implementing effective preventive measures. By identifying the key factors that contribute to commercial fires, businesses can take proactive steps to mitigate risks and ensure the safety of their premises.

The following are some of the most frequent causes of commercial fires.

  • Arson: All types of businesses and buildings are at risk of arson. These types of commercial fires are often devastating due the likelihood of the fire occurring outside normal business hours.
  • Bushfire: Lightning strikes, broken glass, heat and combustible materials can spontaneously spark bushfires in high temperatures and wind conditions can fan the flames so the conflagration travels rapidly over many kilometres.
  • Electrical malfunctions: Faulty wiring, overloaded circuits or malfunctioning electrical equipment can lead to short circuits or sparks, resulting in fires.
  • Heating and cooking equipment: Improper use or maintenance of heating systems such as furnaces or boilers, and commercial cooking equipment such as stoves, fryers or ovens can cause fires.
  • Flammable materials: Improper storage or handling of flammable substances like chemicals, solvents, fuels or cleaning agents can create an environment prone to fires.
  • Combustible waste: Accumulation of combustible materials like paper, cardboard, packaging materials or clutter can fuel a fire and contribute to its spread.
  • Faulty or neglected equipment: Lack of maintenance, mechanical failures or malfunctioning of machinery, such as industrial equipment, ventilation systems or generators, can lead to fires.
  • Human negligence: Accidental actions like careless smoking, improper use or storage of flammable materials or negligent handling of open flames can contribute to commercial fires.

What can businesses can do to reduce their fire risk?

Businesses need to prioritise broad fire safety measures, including preparation and planning what to do in the event of fire risk events, conduct regular inspections, staff training, adequate storage and handling procedures, and adherence to building and fire codes.

Some critical measures to minimise the risk of fire impact to business

The key benefits of having a robust fire risk management strategy in place

By investing in robust fire management practices, business owners can enjoy the peace of mind that comes from knowing they have taken proactive steps to mitigate fire risks, protect lives, workplaces and employees, valuable property and assets, and maintain a resilient business environment.

Benefits of having business fire risk management practices in place

  • Enhanced safety: Robust fire management practices prioritise the safety of occupants, employees, and visitors. By implementing preventive measures, conducting regular inspections, and maintaining proper fire safety systems, the risk of fire incidents is significantly reduced, creating a safer environment.
  • Compliance with regulations: Having robust fire management practices ensures compliance with applicable fire safety regulations and codes. This helps avoid legal issues, penalties, and potential business disruptions that may arise from non-compliance.
  • Protection of assets: Effective fire management practices help safeguard valuable assets, equipment, and property from fire damage. By implementing measures such as fire detection systems, proper storage of flammable materials, and emergency response plans, businesses can minimise losses and maintain continuity.
  • Business continuity: By having robust fire management practices in place, businesses are better prepared to handle fire emergencies. Well-defined evacuation procedures, trained staff, and regular fire drills ensure a swift and coordinated response, minimising the impact on operations and enabling a faster return to normal.
  • Reputation and trust: Businesses with robust fire management practices demonstrate a commitment to safety, which enhances their reputation and instils confidence among employees, customers, and stakeholders.

3 key insurance actions to protect your business in facing fire risks

  1. Review your insurance cover, and make sure you understand what exclusions apply. Are outbuildings and vehicles included? Can you afford for your business to stop revenue earning operations during a crisis or rebuild?
  2. Are you covered for total replacement if your premises burns to the ground? You don't want to be caught out of pocket due to underinsurance. Consider getting a quote from a building valuation expert to calculate the cost of rebuilding your premises at today's value.
  3. Make an inventory of assets, room by room and take photos. If you are impacted by fire, this will make it easier to know what items to claim on.

Prevent your property or business assets from going up in smoke by getting insurance and risk management advice in advance. Our brokers have the expertise to help ensure you have the right protection in place.

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Sources

1 National Construction Code , accessed 4 October 2023

2 Fire Regulations Australia , accessed 4 October 2023

Disclaimer

Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient's industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers' control.

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