The effect fire sprinklers have on insurance rates.

[SprinklerDesigner2]

Not your usual NFPA question but it does have something to do with fire sprinklers and NFPA standards.

I know we have a number of insurance company people here and I would like to have an idea fire sprinklers have on insurance rates especially for storage facilities and Extra Hazard production areas.

About 30 years ago I remember giving a proposal to install sprinklers in an existing 30,000 sq ft metal building which was used to manufacture plastic parts using extrusion molding with machines that had a lot of hydraulic oil. Going on memory the building was insured for $10 million (1988 dollars) at a rate of $1.20 per $100 or 1.2% which gave annual premiums of $120,000.

The owner told me the sprinklered rate for the building would be reduced to $0.25/$100.

Seeing as how the sprinkler proposal was $40,000 it came as a no brainer as there would be a 100% return on investment in six months. We got the contract and the owner couldn't wait for the installation.

What are today's rates for sprinklered vs unsprinklered buildings?

Let's say I have a 200,000 sq ft warehouse with 20' rack storage of exposed Group A plastics and while the building does have sprinklers it's an older OH pipe schedule system installed between 45 and 50 years ago.

Peak of the building is 30' with a 6" riser having a city supply of 60 static, 40 residual flowing 1,600 gpm at the street. Doing the calculations and it isn't good.

The value of the product, totally guessing here, has to be at least $30 million and I could see $50 million especially if we have business interruption insurance enter the picture.

What affect would upgrading the system to an ESFR using K16.8 pendent heads per NFPA #13 have on the insurance rate?

 

[cdafd]

Sorry no answer

I kept hearing that over the years, but never heard an owner tell me if or how much they saved.


What I hear lately is

1. Water damage costs

2. So called mold problem

I did have one owner tell me,,,, insurance is cheaper,,,, Than to install a fire sprinkler system.

I have not read thru this, to see if it included major upgrades::::

https://fireadvocates.org/wp-content/uploads/2020/10/tax-incentive-fact-sheet.pdf

 

[LCREP]

I have been retired since 2015 after 36years on the loss prevention side of the insurance business. The answer on lower insurance rates is…….it depends!
On the following:

1. Hard insurance market or soft. Hard big difference in rates, soft nope. Why because some insurance company will always write it!

2. Most insurance companies make $ on their investments, low interest rates not so much $. Great investment market ie the past few years tons made. Got to keep the share holders happy.

3. Class of business some companies love high risk, high exposure occupancies, some do not. Based on rating they make $ on these tough risks.

4. Is the insurance carrier providing 100% of the coverage or buying reinsurance on anything over 10% of the exposure? Very popular in the Europe market.

5. Is the customer big or small, 100 locations or 2? It’s called spreading risk and $$ priced accordingly.

6. Does company self insure for the 1st 1,2,3 million and buy excess coverage for the big loss.

7. With deregulation of the insurance market, 25 years ago the days of ISO calculations to develop rates are gone. I used to produce the rate on high $ risks. I would ask the underwriter what rate they needed, amazing how I could give the underwriter the rate they wanted to be competitive!

So as you can see the insurance world is very easy to understand.

Retirement a wonderful thing.

Hope this helps.

 

[RainbowFS]

Insurance against water damage can be more than fire insurance. I was recently told by an owner that was required to retrofit sprinklers in his small manufacturing plant that his property insurance rates were going up significantly specifically because of the threat of water damage.

Alex Traw
Rainbow Fire Sprinklers
Albany, Oregon

 

[chicopee]

Your question should be directed to your insurance agent who in turn would contact the insurance underwriter would is the person that sets the insurance rate.