With fire-related claims posing a significant risk to commercial operations, Australian insurance professionals are being encouraged to place greater emphasis on fire separation practices and ongoing risk assessments.
Gallagher has issued new recommendations aimed at improving fire safety and supporting insurance readiness, particularly for businesses operating in high-risk sectors or locations.
The concept of fire separation – the physical division of spaces within buildings to restrict the movement of fire – is gaining renewed attention among insurers and commercial property owners.
By using fire-resistant materials in walls, floors, ceilings, and doors, businesses can contain fires to specific areas, reducing the risk of damage to critical operations such as server rooms, plant equipment, and hazardous storage areas.
New construction projects typically offer greater flexibility for incorporating fire separation into building design.
However, existing structures can also be upgraded using retrofitted fire doors, sealed ducting pathways, and designated isolation zones, according to Gallagher’s risk advisory team.
Australian building regulations, including provisions within the National Construction Code, outline the necessary specifications based on building use and type.
Businesses that lease premises should request access to the fire risk assessment reports and maintenance schedules held by landlords or property managers. This information may be required by underwriters during the insurance application or renewal process and could influence policy terms and premiums.
Expanded polystyrene (EPS), commonly used for insulation in cold storage and food processing facilities, continues to be flagged by insurers as a notable fire risk.
Gallagher recommends conducting detailed assessments of any premises using EPS to ensure that fire prevention measures are in place.
This includes sealing all wall openings, keeping ignition sources away from insulation panels, and housing electrical systems in fire-retardant conduits. Equipment charging points, such as those for electric vehicles or forklifts, should also be situated away from EPS-lined walls.
Insurers typically require detailed documentation of EPS-related safety practices. These may include the results of thermographic scans on switchboards, maintenance records for fire systems, and storage protocols for flammable materials.
Regular fire risk assessments are essential to maintaining safe operating conditions and ensuring insurance coverage remains valid.
Key fire risks identified in workplace settings include defective electrical systems, overloaded sockets, unmonitored heat processes, and improper storage of flammable goods.
Australian Standard AS1851 requires routine servicing and testing of fire protection systems, including extinguishers, sprinklers, and alarms.
Gallagher advises that businesses integrate these inspections into their broader risk management frameworks and maintain records of compliance.
In addition to its commercial guidance, Gallagher has released a room-by-room fire prevention guide for homeowners, aimed at reducing domestic fire risks.
The resource covers kitchen, bedroom, and backyard safety, highlighting common triggers such as unattended cooking, poorly maintained appliances, and improper battery storage.
Homeowners are advised to test smoke alarms regularly, establish clear evacuation plans, and conduct routine checks on wiring, especially in older properties.
The increasing use of lithium-ion batteries in consumer electronics and vehicles has also prompted warnings about storage and charging practices.
For both residential and commercial policyholders, Gallagher stressed the importance of understanding policy exclusions and ensuring cover reflects the full cost of rebuilding or replacement.
An up-to-date asset inventory, supported by photographs, is recommended to facilitate claims handling in the event of a loss.
The rising frequency and severity of wildfires globally, driven by climate change and urban expansion, adds urgency to fire preparedness efforts.
Allianz Commercial’s Emerging Risk Trend Talk highlighted that insured losses from wildfires increased from US$8.7 billion in the 2000s to more than US$56 billion in the 2010s.
Events like the 2025 California fires, which alone resulted in estimated insured losses of up to US$40 billion, demonstrate the financial implications for insurers, reinsurers, and businesses alike.
