Delegates attending this week’s AICLA/ ANZIIF Claims Convention in Sydney are set to receive an education on the increasing risks associated with lithium-ion battery powered items.
With fires thought to be sparked by lithium-ion batteries on the rise, Crawford Australia’s Chris Bennett will address attendees suggesting policy wording and special conditions should be carefully considered and aligned to insurers’ business goals.
“There are more and more items hitting the market that are powered by lithium-ion batteries as we move to a green future. That’s terrific on the one hand, but it also comes with emerging risk that our industry needs to understand and continue to learn more about,” Bennett noted.
Lithium-ion batteries power everyday items, large and small, including mobile phones, electric vehicles, smart watches and rechargeable power tools such as drills and garden blowers. Essentially, any item that is rechargeable contains, or is powered by, a lithium-ion battery. By 2026, the Australian Competition and Consumer Commission estimates that every Australian household will contain an average of 33 devices powered by lithium-ion batteries.
Bennett who heads up Crawford’s virtual loss adjusting team, says in the majority of cases, user error is the cause of a lithium-ion battery bursting into flames.
“Causation, when it is linked to the batteries, is more often linked to user error, mechanical damage and or charging behaviour, with very few claims in Australia involving manufacturing defects in the battery cells themselves.
“Overcharging is a real issue. Overcharging is when you continue to keep the device plugged in charging, when the device itself is already fully charged. This is a known fire risk,” Bennett explained.
“The question must be posed, does the insurance respond when the insured is at fault through overcharging and not following clear safety protocols? These are things which insurers and underwriters need to think carefully about as this technology progresses,” Bennett questioned.
Lithium-ion batteries have received widespread publicity over the past 18 months, including being linked to the deaths of two people in NSW earlier this year during a house fire.
However, Bennett is quick to point out that in many cases lithium-ion batteries simply have a reputation issue.
“We hear the term ‘lithium-ion battery fire’ used a lot but it can be quite unhelpful because of the perception it creates; that terminology alludes to the fact that the battery started the fire, when in reality, the expert investigators find it very difficult to confirm if batteries are the cause, or simply present where another ignition source was primary.
“The presence of lithium-ion batteries will make an existing fire worse. In other words, the fire is exacerbated by the presence of lithium-ion batteries, which become a secondary source of ignition,” he elaborated.
“The attention that lithium-ion batteries are receiving is good because we need consumers to be aware of the risks and follow the safety precautions, and as an industry, I think we have a role to play when it comes to sharing knowledge and insights,”
Bennett said.
He also noted that underwriters and insurers could place conditions on polices to not only limit their exposure, but to encourage proper safe use of lithium-ion powered items.
“Rather than blanket exclusions for events linked to lithium-ion devices, placing certain conditions on policies could be considered as a way for insurers to mitigate their risk. Things like having clear parameters around safe battery storage, as well as conditions to ensure people purchase traceable batteries from reputable sources and brands and adhere to manufacturers’ guidelines.”
Bennett will team up with Chris Kenyon-Edwards of Burgoyne & Partners, to deliver the session titled “Myth vs Reality: Lithium Ion Batteries.” Burgoyne is home to consulting scientists and engineers.
