Fire Losses During Construction Can Be Alarming
Construction or renovation projects represent a significant risk for insurers. From the early stages of a project to the final phase when the largest concentration of values are on the site, losses from fire can add up for insurers. I will discuss a few examples involving important buildings in recent years in France, but this trend is also relevant for other markets around the world.
This historic building in Paris suffered a fire on the night of July 10, 2013. The building was empty due to renovation work, and firefighters were only alerted about the fire by people in neighboring buildings after they saw smoke and flames rising from the roof. Upon arrival, firefighters discovered a huge fire in the attic. To reach its source, they had to create openings in the structure. The roof eventually collapsed - as result of the large amounts of water used to put out the fire.
It appears that there were no specific safety measures, such as a security guard who could have alerted the fire department, during the renovation of the building. It is also worth noting that for another potential attic fire, this time in the Palace of Versailles when it was undergoing renovation, special openings had to be created to allow firefighters to treat it.
Maison de la Radio
Maison de la Radio houses the different stations of Radio France in a 22-storey building of approximately 100,000 square meters. When renovations began in 2009, the main goal was to keep the radio studios operational while renovations were carried out in phases. In October 2014, a fire broke out after-hours on the eighth floor where asbestos was being removed. While the building was equipped with manual alarms, the alerts weren’t triggered because no workers were present at the time of the fire. It was only noticed when the smoke was first seen outside the building, but by then significant damage had been done.
After the loss, an automatic fire alarm system with one hundred wireless sensors was installed on the rest of the 11 floors undergoing renovation.
Cité des Sciences et de l’Industrie
The Cité des Science, which occupies two-thirds of a 20,000 square meter building complex, is one of Europe’s largest science museums. In August 2015, a massive fire broke out at a giant shopping complex adjacent to the science museum - a few days before a fire safety system was to be installed. Smoke detectors had been turned off because of the construction work. The complex was nearing completion and had a high fire load due to furniture and equipment on the premises. In addition the vents were closed, trapping smoke and hot gases under the roof, and causing the bitumen coating on the roof to melt.
During a substantial renovation of this five star luxury hotel in January 2016, a fire broke out in the middle of the night, destroying the entire seventh floor. According to the initial investigations, the fire may have begun in two electric fuse boxes. In addition to the fire damage to the upper floor and the roof, the lower floors were severely damaged by water used to extinguish the fire. In this instance, only part of the building was damaged, so a partial reopening of the hotel was possible in early June, reducing the amount of advanced loss of profit that otherwise would have been significant.
Fire losses during construction are not uncommon despite measures to prevent them. They often occur in a vulnerable environment, with high fire loads and inadequate fire protection. Partitioning vulnerable areas during construction can help, but is often rendered ineffective by various pipe ducts and cables, accumulations of pallets and other combustibles. Furthermore, lack of knowledge of the site by the fire brigade - often due to lack of blueprints and the large numbers of different parties working on the same site - makes firefighting more complex. When a fire occurs during the final stages of the construction or renovation, there is a huge potential for loss, which may be further exacerbated if combined with advanced loss of profits. Introducing specific measures, such as efficient security guards and fire alarms, can help to mitigate the risk. Many insurers turn to facultative reinsurance to gain underwriting expertise, limit exposure and reduce volatility during construction. Contact your local Gen Re representative to learn more.