Massive rise in cost of business fires

The Association of British Insurers (ABI) said it paid out £790 million in commercial fire claims in 2005, up by a massive 60% on the previous year. Also, business interruption claims following fire damage, at £220 million, were the highest since 1997.

Insurers now expect one in every hundred businesses to make a fire-related claim in 2006, which made fire the main "cost-driver" for commercial property insurance, according to the ABI.

"Too many firms are seeing their profits literally going up in smoke," said Jane Milne, the ABI's head of property insurance.

She added: "Fire is increasingly putting jobs and services at risk, threatening the existence of some small businesses. The disruption caused to a firm can be devastating unless good fire safety and business continuity plans are in place.

"Insurers and the fire service play an important role in supporting fire prevention. But ultimately it is the responsibility of every business."

Risk assessment

The ABI said that changes to fire safety legislation in October - as a result of the Regulatory Reform (Fire Safety) Order (RRO) - should result in a greater emphasis being placed on fire prevention.

It called on firms to regularly review the risk of fire and take steps to minimise it, for example by assessing any processes involving heat and inflammable materials.

It also called for greater staff responsibility and awareness. "One individual within the firm should have overall responsibility for fire management, including ensuring that staff are aware what to do in the event of a fire," said an ABI spokesperson.

Because arson accounted for around half of all commercial fires, businesses should also ensure that premises were secure to deter such malicious attacks.

Government blamed

The Fire Brigades Union (FBU) said it was "deeply worried" by the sharp rise in business fire claims. It claimed the figures backed its warnings that "cutbacks" in the fire and rescue service would push up fire losses.

FBU general secretary Matt Wrack said: "The increase in fire losses and fire damage to businesses in the first full year of the Government's reforms is truly shocking. These are people's jobs and businesses going up in smoke, not just property losses.

"We warned of the impact the cuts and changes would have. Business is now left counting the cost of these Government reforms."

He added: "Our members are very proud of rescuing record numbers of people and saving lives, but we are now seeing a sharp rise in economic losses which often lead to a loss of livelihoods.

"We must keep driving down the number of fire deaths, but we must also ensure that at the same time we protect businesses, jobs, homes and commercial property."