The warehouse that catches fire in 2026 bears almost no resemblance to the one that caught fire a decade ago, and the gap between how these facilities operate and how they are insured is widening, according to Zachary Cruickshank (pictured), Beazley Canada country manager.
"Traditional warehousing has transitioned into high-turnover logistics hubs with continuous movement and machinery, increasing ignition sources, mechanical activity and operational complexity," Cruickshank said.
The shift has been driven by e-commerce, which has pushed rapid expansion of fulfilment centres and the rise of mega-warehouses with concentrated asset values. The scale of these facilities has also changed the loss calculus. Cruickshank said the concentration of value in a single location – inventory, equipment, building – means the potential for a single-event loss is materially larger than it was even five years ago. A fire or flood that might have been a manageable claim in a traditional warehouse can now produce materially larger losses than would have been typical a decade ago.
At the same time, automation has introduced robotics, automated storage and retrieval systems, conveyors and AI-driven picking into facilities that were once static storage.
Cruickshank said those technologies bring risk categories that sit alongside traditional property exposures rather than replacing them.
"Equipment breakdown, system failure and cyber exposure" are now layered on top of conventional fire and weather risk, he said.
Inside the buildings, the physical risk profile has changed as well. Higher vertical storage and denser racking are elevating fire loads, and suppression systems designed for older layouts may no longer be adequate.
"Higher vertical storage and racking are elevating fire loads and creating greater challenges for fire suppression unless systems are specifically designed or retrofitted," Cruickshank said.
Lithium-ion batteries have added another layer of risk. They are present both as stored inventory and as power sources for material handling equipment such as forklifts, and their behaviour in a fire scenario is materially different from conventional combustibles.
On the claims side, Cruickshank said severity (not frequency) is the dominant concern.
"Large fire losses are more severe and more frequent than historical norms, driven by high total insured values, dense storage and combustible goods," he said.
Day-to-day attritional losses – minor water damage, theft – remain relatively stable, Cruickshank said. But equipment breakdown and automation-related incidents are increasing modestly, and water damage from sprinkler leaks and freezing remains a persistent issue across the sector. The concern is less about frequency across the board than about the severity and complexity of the losses that do occur.
Catastrophe losses are compounding the problem. Warehouses and logistics hubs are increasingly clustered near transport infrastructure – ports, highway interchanges, rail corridors – which tends to place them in flood zones, earthquake-prone areas or both. That clustering raises aggregation risk for insurers writing across multiple facilities in the same corridor.
Business interruption claims have also grown more complex. Because modern warehouses are tightly woven into broader supply chains, a loss at a single facility can cascade into delays and costs for customers and distribution networks well beyond the site itself.
"Business interruption claims are rising in complexity and cost due to longer rebuild times, supply chain dependencies and scarcity of alternative facilities," Cruickshank said.
Sustainability initiatives are introducing another layer. Solar panels on warehouse rooftops, lithium-ion battery storage systems and the electrification of vehicle fleets all carry fire and electrical risks that Cruickshank said are still being fully understood by the market.
Underlying all of it is an underinsurance problem. Inflation and supply chain volatility have pushed replacement costs higher, and many facilities are insured at values that no longer reflect what it would actually cost to rebuild and restock them.
"Replacement cost accuracy is becoming a major underwriting focus," he said.
The cumulative picture is one where the insured asset has fundamentally changed – more valuable, more complex, more interconnected, more combustible – but coverage structures and risk assessments have not always kept pace. For underwriters, the challenge is no longer just pricing the building. It is pricing the operation inside it.
