Companies across sectors are rethinking how to manage emerging risks — including lithium-ion battery fires — as losses mount.

Key insights

  • The incidence of lithium-ion battery fires and "thermal runaway" is rising in line with the growing popularity of portable electronics and electric vehicles.
  • As companies turn to stockpiling amid trade and tariff uncertainty, the concentration of goods at risk is growing in ports, warehouses and industrial parks.
  • The rising trade in secondhand electric vehicles (EVs) and vehicle battery packs is increasing the number of damaged batteries in circulation.
  • Governments and regulators are proposing stricter quality guidelines, and businesses have an essential role in promoting safety-first cultures.

Incidents of lithium-ion battery-related fires are rising globally. Due to their intensity and self-sustaining nature, lithium-ion fires can spread quickly.

In addition to the potential cost of property damage and business interruption, organizations can be on the hook to pay for clean-up costs and environmental remediation once a blaze runs its course.

There are implications for insurers. In its latest financial filing, Australian carrier Suncorp revealed the proportion of high-value claims involving Li-ion ignition sources had nearly doubled in five years.

Electrification and Li-ion Battery Fire Risk

Why stockpiling trends could increase losses from warehouse fires

From waste and recycling companies to ports and terminals, companies across industry sectors are rethinking their exposure to lithium-ion battery fires as losses mount.

As manufacturers and retail suppliers turn to stockpiling in response to recent trade and tariff uncertainty, the concentrations at risk from Li-ion fires — as well as natural catastrophes and other risks — are growing in many locations.

According to Gallagher research, nine in 10 firms globally already use stockpiling or plan to use it, to manage tariff and trade uncertainty. However, around a quarter say they're ill prepared for the unintended consequences associated with such strategies.

"We've seen a lot of companies stockpiling — bringing goods in earlier and then leaving them there to get in front of the tariffs," says Alec Russell, managing director, Marine Cargo, Gallagher. "But effectively, you can de-risk in one place and pass that on to another — out of the frying pan and into the fire."

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If a large windstorm comes through, you could get a bigger loss because you have a greater accumulation of values in single locations.
Alec Russell, managing director, Marine Cargo

A series of fires on board ships has highlighted the growing exposure for the marine cargo insurance market. A Li‑ion battery fire was a contributing factor in the March 2022 sinking of the roll‑on/roll‑off carrier ship Felicity Ace in the Atlantic Ocean and its cargo of over 4,000 vehicles.

Notably, nearly 24% of all EV fires are directly caused by lithium-ion batteries. This poses unique considerations for container ships, multi-story and basement carparks, and charging stations, where batteries and vehicles are clustered in a single location.

Increased trade in secondhand EVs and battery packs is an emerging risk, with the inferior quality of battery cells rising as demand for lower-cost options goes up. A growing number of EV owners are buying secondhand replacement packs for their vehicles without knowing the full history of the product, such as whether the original vehicle was in a crash.

Electrification and demand for EVs present an emerging risk

Globally, demand for Li-ion batteries is expected to surge from 700 GWh in 2022 to around 4.7 TWh by 2030, driven by the exploding market in electric goods, which is expected to reach USD400 billion in the next five years.

Despite efforts to improve the stability of Li-ion batteries and reduce the risk of thermal runaway — a self-sustaining and uncontrollable chain reaction — the potential remains for them to overheat and explode. Once combustion is underway, Li-ion battery fires are very difficult to contain or extinguish. In enclosed spaces, they can spread quickly.

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Once combustion is underway, Li-ion battery fires are very difficult to contain or extinguish. In enclosed spaces, they can spread quickly.

Fires can be triggered by over-charging, battery damage, quality issues during manufacturing or incorrect disposal. Some blazes have been started by someone using the wrong charger, or even due to a chemical reaction with saltwater.

A burning issue for urban centers and beyond

Urban areas have a higher concentration of Li-ion batteries, property and people, and thus are more at risk of losses from self-sustaining fires. Certain types of properties are more vulnerable, including multi-use commercial and residential buildings, public buildings with open charging stations and student accommodation where e-scooters and other devices are regularly charged in common areas.

Due to the long charge time for EVs, e-bikes and scooters, owners often leave them unattended while charging, increasing the likelihood that overheating and other warning signs of a damaged battery will go unnoticed.

In the US, the New York City Fire Department estimates the city has experienced more than 800 fires sparked by lithium-ion battery explosions since 2022, causing 30 deaths and more than 400 injuries.

Legislators have moved to implement stricter safety guidelines for the use, transport and storage of Li-ion batteries, with cities banning e-scooters from being taken on underground transportation systems and moves by aviation authorities to regulate their use on flights.

With safer handling and awareness of the risks, it's possible to enjoy the benefits of electric devices without the downsides of increased fire exposure.

Businesses have an essential role when it comes to following best practice guidance and promoting the safe use, transit and storage of Li-ion batteries. To reduce the risk of fire and protect people and property, firms should:
  • Encourage outdoor battery charging, away from buildings where this is possible.
  • Supervise indoor charging and use fire-resistant charging cabinets.
  • Keep flammable materials away from charging stations.
  • Inspect batteries regularly for signs of damage or heat.
  • Replace batteries before they reach the end of their recommended lifespan.
  • Create an emergency response plan and train staff in fire safety procedures.

Published January 2026