Insurers redesign policies for fire risks

Lithium-ion threats expose valuation gaps in homes.

Insurers in Singapore are overhauling home insurance models as lithium-ion battery fires emerge as a high-impact risk, exposing gaps in coverage and forcing a rethink of pricing and policy design.

Andrew Lim, Chief Executive Officer of UOI said the rise in battery-related fires, alongside traditional fire causes, is reshaping risk assumptions. He noted a “24% spike in PMD related fires in a single year.” He added that the industry is reaching “a tipping point where we need to continuously redesign policies to adapt to evolving risk.”

The challenge lies in balancing low-frequency but high-consequence events such as lithium-ion fires, which can cause significant damage when they occur. Lim said insurers must expand coverage to reflect modern lifestyles. “We are spending our coverage to seamlessly integrate modern devices such as EV chargers and also green home systems into the core fire profile,” he said.

At the same time, a widening valuation gap is emerging as homeowners invest in smart technologies and upgrades without updating their insurance coverage. Lim warned of “a massive hidden protection gap in the market,” as policies fail to reflect the true value of tech-enabled homes.

“To close the valuation gap, insurers have to bring together digital precision and the human touch,” he said, calling for a shift away from generic policies toward asset-specific protection. He added that clearer valuation and personalised advisory are needed to avoid underinsurance. “We want to make complex valuations, simple, transparent, completely in line with the tech integrated homes we live in today.”

Beyond policy design, insurers are also rethinking their role in risk management. Lim said the traditional reactive model is no longer sufficient. “But with physical and digital risk escalating so rapidly, that model is obsolete.”

Instead, insurers are positioning themselves as proactive partners by offering risk education and prevention services. “Being a partner is also more than just providing coverage, but helping consumers understand the best practices to protect themselves,” Lim said.
As fire risks evolve alongside technology adoption, insurers face growing pressure to align coverage, pricing and prevention strategies with the realities of modern living.