Battery Boom, Fire Risk Rising

Why It Matters

Battery‑driven fires are rapidly becoming the costliest residential fire risk, forcing insurers to rethink underwriting, premiums, and loss‑prevention measures across the property sector.

Key Takeaways

• Lithium‑ion battery fires now top residential fire risk in WA
• Thermal runaway causes rapid, high‑temperature fires hard to extinguish
• Claims often exceed $500,000 due to structural destruction speed
• Strata hallways storing e‑bikes pose egress and liability hazards
• Emerging standards and consumer education needed to curb frequency

Summary

The panel on Insurance Business TV highlighted lithium‑ion batteries shifting from a niche hazard to a mainstream property exposure, with insurers now seeing a surge in related claims. Data from Western Australia showed 166 battery‑initiated fires in 2024—roughly one every two days—while New South Wales reported around 360 such incidents, a doubling since 2022. Thermal runaway, the self‑sustaining chemical reaction that drives these fires, produces extreme temperatures (up to 900 °C), toxic gases, and a high risk of reignition, leading to claim sizes frequently surpassing $500,000.

Panelists emphasized that the danger is amplified in high‑density residential settings, especially strata complexes where e‑bikes or scooters are charged in hallways or balconies. Dominique noted that a single battery failure can block egress and trigger multi‑unit liability, while Melissa cited media‑reported average loss figures rising from $87,000 for traditional fires to about $250,000 for battery‑driven incidents. Martin explained that lithium‑iron‑phosphate (LFP) chemistry is the safest, but many consumer devices use more volatile chemistries, and the lack of robust battery‑management and cyber‑security controls further escalates risk.

The discussion underscored the need for new safety standards—such as Australia’s TS5398 electrical energy storage equipment requirements—and stronger consumer education to curb unsafe charging practices. Insurers are beginning to adjust underwriting appetite, incorporating questions about battery storage, charging locations, and IoT‑enabled management systems, but data gaps remain. Without coordinated regulation and building‑bylaw updates, the frequency and severity of battery‑related losses are likely to keep climbing, pressuring premiums and liability exposures across residential, commercial, and industrial portfolios.

Overall, the rise of lithium‑ion battery fires signals a transformative risk for the property insurance market, demanding proactive risk‑mitigation strategies, tighter standards, and heightened awareness among owners, tenants, and insurers alike.

Original Description

Lithium iron battery fires are moving from niche concern to mainstream property risk, and the insurance industry is taking notice. In the first Property Insurance Power Panel of 2026, Insurance Business TV brings together Melissa Jolly, Managing Director at Pinnacle Insurance Brokers, Martin Birch, Principal at AgriInsurance, and Dominique Vagi, Chief Underwriting Officer at Hutch Underwriting, to examine how battery energy storage systems are reshaping underwriting appetite, claims exposure, and premium pressures.

From thermal runaway and toxic gas release to reignition risks and evolving battery chemistries like LFP, this expert panel breaks down why lithium-related incidents are being classified as a non-standard fire problem — and what brokers and underwriters need to understand as e-bikes, e-scooters, and energy storage systems become everyday property exposures.