The market for e-scooters and e-bikes is on fire. Could that burn your property book?
Technology has taken the world by storm in the last decade or so, especially in the transport industry. From electric cars to motorised outdoor equipment such as hoverboards, e-bikes, and e-scooters, moving around has become more accessible. However, amidst the excitement and joy of riding these motorised gadgets comes the issue of shockingly intense fires.
How bad is this fire problem?
Globally, statistics are hard to come by as this is an emerging issue. In two of the larger cities where mico-mobility has made significant penetration, New York and London, there is information being published about the fire problem with e-scooters and e-bikes.
Four times a week on average, an e-bike or e-scooter battery catches fire in New York City. As of the end of October 2022, the New York City Fire Department (FDNY) investigated 174 battery fires, putting 2022 on track to double the number of fires that occurred in 2021 (104) and quadruple the number from 2020 (44).
These bikes when they fail, they fail like a blowtorch. We’ve seen incidents where they actually have so much explosive power, they are actually blowing walls down in between rooms.”Dan Flynn, chief fire marshal, New York Fire Department.
In London, the fire brigade responded to 89 fires involving micro-mobility devices through to the end of October 2022, compared to 47 in all of 2021 and 13 in 2020, representing an even more aggressive incident growth rate than that of New York. Whilst statistics in other areas are not easy to find, media reports show that events are occuring everywhere – anecdotally with more regularity and severity in India, where unfortunately incidents have involved mass fatalities.
With the exponential growth of e-mobility, so too grows the threat of fire.
The meteoric rise of micro-mobility
The global micro-mobility market is estimated to grow from USD 3.4 billion in 2022 to USD 6.1 billion by 2027 at a CAGR of 12.5% over the forecast period. This market growth is primarily driven by rapid urbanization, increasing costs of vehicle ownership, rising demand for emission-free vehicles, growing traffic congestion, strict emission controls, and increasing demand for more economical modes of transportation.
Two specific trends are driving the increased risks for commercial property insurers;
- Use of personal micro-mobility devices for commuting to and from places of work, where those employees then store and charge them inside their employer’s property. Whilst on-demand devices are available to urban dwellers in many cities – meaning that the user will leave the e-scooter or e-bike on the street once they are finished their commute, rather than taking it indoors – the low-cost of such devices has encouraged a high rate of personal ownership. And it is in that sector where the exposure truly lies; personally-owned devices, often not professionally maintained, being taken into a place of work and put on charge for a long period of time.
- Exponential growth of online delivery by riders using e-scooters and e-bikes, which has created hundreds of thousands of ‘dark’ locations across the world where these devices are charged en-masse. This is particularly prevalent for ‘last-mile’ grocery delivery apps, as their value proposition is to deliver in a very short time-frame (e.g. under 15 minutes), and so they must have multiple small ‘dark stores’ across a city. The most suitable vehicle type for delivering to their customers are micro-mobility devices which can travel on pavements or in pedestrianised areas. Meal delivery apps tend to rely more on conventional engine-driven motorcycles and mopeds as the delivery riders typically cover more distance per delivery.
How does a hot trend become a blazing problem?
Most of these new micro-mobility devices are powered by the amazing innovation in energy storage and delivery that is the lithium-ion battery. To know more about the technology behind lithium-ion batteries you can read some fundamentals here. The benefits of lithium-ion batteries are that they are small, lightweight, and capable of storing a large amount of energy. However, they are also volatile under stress, making them a fire risk.
A lithium-based battery burns extremely hot (between 700oC and 1,000oC), producing high-energy sparks, further fuelled by the gases released as the battery cells decompose energetically, resulting in rapid fire spread. This process happens far more quickly than any other types of fire in a chain reaction known as ‘thermal runaway’, where the cells typically appear to explode. Due to the self-sustaining process of thermal runaway, lithium-ion battery fires are also very difficult to quell.
But what is causing these batteries to fail in the first place? Most battery failures appear to emanate either from poor design, manufacturing flaws, physical abuse, or due to the wrong charger being used.
As an insurer you cannot hope to control – or even just confirm – that these specific exposures are present at the micro-mobility devices sitting in the commercial properties that you insure.
But you can determine whether or not micro-mobility devices are being stored and charged at these locations and then make an informed underwriting decision.
How can insurers understand their exposure?
You are unlikely to find this exposure in a policy application or a broker submission. You need to see for yourself, and the most effective way of doing so is with [VRS]TM Virtual Risk Space. Using our remote inspection tool or by getting your agents to conduct digitized inspections at the property using the [VRS]TM app on their smartphone, you can see and understand the risk.
So what type of output can you expect from a property survey of this type?
- Whether e-scooters and e-bikes are being stored and/or charged within the building or not.
- If charging is taking place near combustible or flammable materials, such as cardboard boxes, paper records or hanging curtains.
- If devices are blocking emergency accessways, which has the double effect of stopping personnel from exiting in a fire scenario and preventing firefighters from getting in.
- Which brand(s) of the scooters being stored at that location, which means a online search for product recall affecting these brands can be done.
- If extension sockets or plug adaptors are being used to connect the chargers to the mains power, which greatly increases the risk of overheating or arcing.
- If there is any existing fire detection or suppression equipment in the rooms where these micro-mobility devices are being charged.
In just a few minutes you can have all the information needed to gauge the risk level. But if you have a large book, how can you prioritise your inspections? Look for properties in these locations or with these characteristics;
- Larger cities, especially those with long-standing traffic congestion or poorly developed public transport infrastructure.
- Older cities or cities in developing countries where streets, pavements and sidewalks are rough and therefore will cause more vibration and shock for these devices.
- Places subject to weather extremes, especially extremes of temperature and heavy rain e.g. cities with sub-zero temperatures in winter, where the temperature is over 40oC during the summer, where there is a monsoon climate, etc.
- Areas where last-mile delivery services are growing in presence, and therefore e-scooter and e-bike utilization for commercial purposes can be expected to be high.
- More at-risk occupancies include multi-storey office buildings, city-centre hotels, supermarkets, restaurants and mixed-use commercial buildings which have commercial units on the ground floor that could be used as ‘dark stores’.
A trend is emerging in New York where small restaurants and parking garages provide charging services for delivery riders for a small monthly fee. Many such locations have spaces for 50 batteries or more. The catch is these informal facilities rarely practice safe charging methods, with racks and racks of chargers, extension cords and power strips stretching across a room, just about the most dangerous arrangement possible. Many of these rooms are also back rooms or basements without ventilation, making any potential fire even more dangerous. In June 2022, fire marshals found more than 100 batteries in a fire in one such location.
Now that the risk is visible, what do we do next?
Managing this risk is a challenge, so avoiding it is the only reliable strategy at present. Once you know what the state of play is at the property, the action sequence should be;
- Recommend that micro-mobility parking and charging facilities are moved outside the building, clear of the external walls and at least 3m from the closest vehicle parking spot.
- If micro-mobility devices must be stored inside the premises (e.g. there is no parking place outside, there have been incidents of theft, the outside temperature is extremely high or low, etc) then stop them being charged inside the premises. Ensure that staff only charge them in their own residences, and provide them with safety tips on charging at home, such as this advice from the NFPA.
- If you cannot convince them on either of those two points, then advise them to;
- Only charge micro-mobility devices in an area where someone is continuously in attendance e.g. reception area, security station, etc. This increases the probability that intervention can take place before the fire takes hold or that the alarm is raised early.
- Provide portable fire extinguishers that are suitable for lithium-ion fires. These are Class B fires, meaning that any ABC fire extinguisher will be suitable for use, although it is recommended to use extinguishers which apply Aqueous Vermiculite Dispersion (AVD) as these are best suited to lithium-ion battery fires.
- Or just stop insuring them…
It’s that simple; get them out of the premises, and if not, then stop them being charged indoors.
Can this fire risk be eliminated?
Lithium-ion batteries will power e-scooters and e-bikes for some time to come, so we should be bracing for this being a long term issue, perhaps across the next decade.
New standards are being proposed in several countries, including stringent cell-level safety checks, requirements for smart battery management systems and chargers, etc. But the fleet that is out there now will be in use for up to four years more, based on industry best estimates. There is no guarantee that new regulations will be respected in the countries where the majority of e-scooters and e-bikes are being manufactured, such as China and Vietnam.
The cheaper e-scooter and e-bike market also has its own ecosystem of repair shops, DIY modifications, and hackers to make the bikes go faster, appear legal, or simply fix broken parts. So even if manufacturers up their game, once they are in the hands of users anything can happen thereafter.
Despite fire concerns, the boom in electric micro-mobility will continue, and it will be predominantly powered by the lithium-ion battery – its ubiquity and cost-effectiveness ensure that. Solid state batteries, which do not have the flammable electrolyte that lithium-ion batteries do, will one day become the dominant technology but the timeline for commercialization is anybody’s guess right now.
Until then, unless you want to get burned, get out there and find the places where the Policyholder is bringing the charging risk onto your books.
Get out there, with [VRS]TM Virtual Risk Space and avoid insured something like this…