Yes, sprinklers work. They are a proven technology, but the stumbling block remains whether they are worth the investment, given that other fireproofing that is more cost-effective will often do a job more than good enough to allow people to evacuate a building.
The insurance industry, unsurprisingly, is a significant backer of sprinkler use — anything that protects assets and is likely to cause less damage, therefore a smaller claim, is likely to be popular. The UK insurance industry alone is responsible for almost GB pound 4 trillion (US$5.4 trillion) worth of property. Every working day, around GB pound 200 million (US$270 million) is paid out by insurers, and this includes around GB pound 5 billion ($6.7 billion) worth of property losses each year.
So, why is it that the perception remains that insurance companies will not reduce premiums when a building owner takes the initiative to install a sprinkler set?
At the recent Fire Sector Summit, Chris Hanks, commercial general manager at Allianz, and chair of the FPA’s RISC Authority, was challenged by the audience over his assertion that the installation of sprinklers would lead directly to a reduced premium somewhere in the order of 50%.
The man from Allianz is “annoying me no end” said one gentleman in the audience. He wanted to know why insurers that he spoke to were not offering reduced premiums.
In response, Hanks explained:
My basic trade, my apprenticeship, was in underwriting. Underwriting is simple maths. If you have a sprinkler in a building you will receive reduced premiums. We will charge half as much.
This claim was met with derision in the audience, but another member of the insurance industry, representing Zurich, echoed Hank’s assertion that they would give sprinkler discounts “in the order of what [Hanks] said.”
Intrigued by this clear discrepancy between the insurer’s view and those of building owners, IFSEC Global reached out to an insurance underwriter in the city, Chaucer. Richard Everall is a property underwriter at the firm, and he told us:
On some of our SMEs we offer a 5-20 per cent reduction dependent on the category of construction and occupancy when sprinklers are installed. That is probably a good rule of thumb across the board.
However, it depends on a whole range of factors. For instance a thatched property could receive a good discount but very much dependent on the type, age, and presence of an open fire etc.
For a recognised quality sprinkler system in an appropriately exposed occupancy 30 per cent seems to be a fairly standard reduction. This can go up to 50 per cent in some examples where a highly fire-exposed occupancy and construction is serviced with the Rolls Royce of systems. This is of course on larger commercial risks.
When it comes to private homes and sprinkler use, they are often not relevant and even if installed, the water damage caused can be so detrimental that they contribute to the loss.
We also asked Everall what a building owner would have to do to receive a premium reduction with their sprinkler system:
To confirm a reduced rate, we tend to need a survey report with the type and category of sprinkler system and maintenance information. However, even if a survey is not supplied, the insured must give a fair representation of the sprinklers in place or this could jeopardize the cover.
Do you have a sprinkler system? Has it helped reduce your premiums? Let us know.
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Here in the US they are pretty rare in homes but you do seem them in rental properties that are in prime vacation spots. I talked to the owner of a property that I rented this summer because I was curious about maintenance and the cost of retrofitting a house. It was surprisingly inexpensive to do the retrofit and maintenance according to him was next to zero. Knowing that systems need to be inspected annually in a business I was surprised to hear that there were no such requirements for homes or rental properties. I don’t see many down sides to a… Read more »
Building insurance covers against lots of risks – fire, flood, vandalism etc. The total price of insurance depends on the potential for loss presented by each component of the overall risk. In some cases the fire risk is high so the fire component makes up a large proportion of the total premium. In other cases, the fire risk is low so the fire component makes up only a small proportion of the total. Sprinklers only cut the risk of fire damage so the effect that they have on the total price of insurance depends on the size of the fire component… Read more »
I have a question that someone here might know. I live in a mountain region where flooding is a part of life, so being in a one hundred year flood plain it is next to impossible to get flood insurance that does not come at a high premium. Would the damage done by a sprinkler system be covered under that flood insurance or would that be part of my home owners? Sorry but I am curious…
JonathanL, I need to put your question into context first. I can’t quote the exact figures off the top of my head, but statistics show that the chances of a sprinkler system accidentally releasing any water are vanishingly small. Sprinkler systems are just water pipes like the ones that are already all over your house to supply cold and hot water and your central heating and you don’t often worry about those causing damage. The sprinkler system is no more likely to leak than the other water systems – in fact, the sprinkler system is less likely to leak because… Read more »
Thank you David for the clarification I have always had that question bouncing around in the back of my mind and now if presented with that or a similar situation I can present a better logical arguement!
Hi I am curious about the installation of sprinkler systems into sheltered housing blocks.
We have a number of sheltered housing blocks that are purpose built, with each unit being a self contained fire compartment. The blocks have fully addressable fire alarm systems, as well as individual smoke detectors in each flat, all being connected to a central monitoring system.
My question is “Do you think the building would further benefit by fitting a sprinkler system”.
same question here, I would like to know more… please do share… thanks…