Key insights
- The incidence of lithium-ion battery fires and "thermal runaway" is rising in line with the growing popularity of portable electronics and electric vehicles.
- As companies turn to stockpiling amid trade and tariff uncertainty, the concentration of goods at risk is growing in ports, warehouses and industrial parks.
- The rising trade in secondhand electric vehicles (EVs) and vehicle battery packs is increasing the number of damaged batteries in circulation.
- Governments and regulators are proposing stricter quality guidelines, and businesses have an essential role in promoting safety-first cultures.
Incidents of non-syndicated link lithium-ion battery-related fires are rising globally. Due to their intensity and self-sustaining nature, lithium-ion fires can spread quickly. In addition to the potential cost of property damage and business interruption, organizations can be on the hook to pay for clean-up costs and environmental remediation once a blaze runs its course. There are implications for insurers. In its latest financial filing, Australian carrier Suncorp revealed the proportion of high-value claims involving Li-ion ignition sources had nearly doubled in five years.
Why stockpiling trends could increase losses from warehouse fires
From waste and recycling companies to ports and terminals, companies across industry sectors are rethinking their exposure to lithium-ion battery fires as losses mount.
As manufacturers and retail suppliers turn to stockpiling in response to recent trade and tariff uncertainty, the concentrations at risk from Li-ion fires — as well as natural catastrophes and other risks — is growing in many locations.
According to Gallagher research, nine in 10 firms globally already use stockpiling or plan to use it, to manage tariff and trade uncertainty. However, around a quarter say they're ill prepared for the unintended consequences associated with such strategies.
"We've seen a lot of companies stockpiling — bringing goods in earlier and then leaving them there to get in front of the tariffs," says Alec Russell, managing director, Marine Cargo, Gallagher. "But effectively, you can de-risk in one place and pass that on to another — out of the frying pan and into the fire."