Lithium-ion batteries: the emerging risk insurers can’t ignore

Charles Bush, head of large and complex claims at Zurich, explained while he is not currently seeing a significant volume of lithium-ion battery fire claims compared with conventional fires, the severity is attracting attention.

“Risk to life is extreme compared to conventional fires where you get more time often to leave the building,” Bush said.

He highlighted incidents involving e-bikes, e-scooters and charging equipment being stored under stairs, as well as a large loss involving a business that had stored 20 old laptops together following a laptop refresh.

The environmental challenges of handling lithium-ion battery-related claims are also explored.

“There are very few people, we’ve realised, across the UK who can clean up a large amount of lithium-ion batteries,” Bush said. “There are lots of unpronouncable chemicals inside these things and if they leach into riverways are clearly extremely damaging.”

Lee Masson, managing director of Halliwell Forensics, said battery quality and charging equipment are key areas of concern.

“The cheaper, lower quality batteries will have poorer quality of manufacture and therefore have a greater propensity for defects that can lead to fires,” Masson said.

“One of the key issues is to use the correct charging equipment. We have increasingly seen fires caused by inappropriate chargers being used.”

Graeme Henry, director of underwriting for UK property at QBE, said, like Zurich, his business has seen relatively few claims but an increase in severity. 

Sarah Brown, risk engineering and resilience director at Axa, agreed incidents remain rare compared with the volume of batteries in use, but pointed to the increasing cost of clean-up.

Examples discussed include an e-scooter loss in a warehouse costing up to £12m, power tools in a builder’s workshop costing £700,000, and a warehouse loss caused by a floor cleaner costing £1.6m.

Lewis Ramsay, chief operating officer of BAFE Holdings and former assistant chief officer for the Scottish Fire and Rescue Service, said with a conventional fire you can plan and have a strategy around the time you’ve got to evacuate or take action but that isn’t the case with lithium-ion battery fires. 

“They are very rapid. That undermines your risk strategy,” Ramsay said. “To get confidence out of your strategy and to build competence you’ve got to be very good with your fire risk assessment and pre-planning.”

The panel also examines the dangers of the grey market for replacement batteries that do not meet safety standards, the risks posed by damaged batteries, plus the need to educate the public about safe storage and disposal.

The experts consider the challenge created by a lack of claims data and ask how insurers can better assess and price lithium-ion battery risks in the years to come.

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