Playing with Fire: The Link Between Fireworks and Insurance
Move over Ned Stark, it's official: winter is here.
The nights are drawing in, the leaves are falling from the trees and people around the world are ready to celebrate the darkness with firework displays. Whether you're celebrating Diwali, Bonfire Night, Thanksgiving, Christmas or New Year, this time of the year is great for fireworks.
But did you know that the relationship between fireworks and insurance is as explosive as the pyrotechnics themselves?
While fireworks bring joy to lots of people, they also present some pretty huge risks to health and safety, property and even - in some extreme cases - life. Striking that balance between between spectacle and safety isn't always properly observed, which has led to a unique insurance landscape surrounding fireworks.
Playing with fire: the consequences of firework displays gone wrong
We've likely all met someone with a story of fireworks gone wrong, but, in most cases, the consequences aren't too serious. In some cases, though, fireworks have caused real tragedies, resulting in some big insurance claims afterwards.
In Tamil Nadu, India, for example, a fire broke out at a fireworks manufacturing unit in February 2024. The blaze killed at least 10 workers and injured over 20 others, with the fire spreading rapidly through the factory, causing multiple explosions.
In the Netherlands, consumer fireworks were banned after so many casualties, but that doesn't stop many Dutch citizens from setting them off each year. On New Year's Eve in 2023, one young boy was killed after one of the rockets exploded prematurely, which caused a huge backlash around the country.
It's not just people's lives that are endangered either - in July 2023, illegal fireworks sparked a wildfire in Oregon that scorched over 40,000 acres. The fire threatened hundreds of homes and forced widespread evacuations, which raised heckles across the insurance sector. Authorities eventually charged a 34-year-old man with arson for starting the blaze with fireworks during a period of extreme fire danger.
And in China earlier this year, a truck carrying hundreds of fireworks exploded whilst in transit, causing fatalities and huge damages. Improper transit was cited as the cause of the blast, which is a warning given to all drivers in the UK too. Any UK driver transporting over 56kg of fireworks may have their insurance invalidated by providers if caught, as well as a hefty fine and penalty points on their driver's license.
Skyrocketing insurance premiums
Fireworks companies are grappling with rapidly rising insurance costs. Charles McKinley, owner of a pyrotechnics company serving several south-eastern US states, reveals the stark reality.
He says: "There's a ton of risk associated in this business. And you know, we have to pay for that," Charles explains. His company's annual insurance premiums now exceed $200,000 for $10 million worth of coverage, encompassing property insurance, transportation insurance, workers' compensation and liability.
This is because the fireworks industry operates under strict regulations and safety protocols. Julie Heckman of the American Pyrotechnics Association highlights the precautions taken. "Often they will wet down the area where the fireworks are going to be launched," she says, noting that firefighters are often on standby during displays in drier regions.
In the UK, the Health and Safety Executive (HSE) provides detailed guidance for organising firework displays, emphasizing the need for responsible planning, site suitability and emergency preparedness
Exploring safer, cheaper alternatives
The rising costs are prompting some clients to consider alternatives to traditional fireworks displays. McKinley reports increased interest in drone shows and laser light displays. However, these alternatives can sometimes be even more expensive, with drone shows potentially costing twice as much as traditional fireworks.
Many music festivals, like the UK's historic Isle of Wight Festival, now use drone light shows rather than the fireworks they previously opted for.
Looking forward
As the fireworks industry navigates these challenges, it's clear that insurance will play a pivotal role in shaping the future of pyrotechnic displays. Companies and event organisers will have to balance the spectacle and tradition of fireworks with the increasing financial pressures of insurance and safety measures.
Some want fireworks banned altogether. Edinburgh Councillor Cammy Day says: “It’s long been my view that we need to ban the public sale of fireworks, given the potential risk to health if misused, but also the unnecessary fear and alarm they cause in our communities.”
The situation echoes challenges faced in other high-risk industries, highlighting the need for innovative solutions in risk management and insurance. As we move forward, the industry may need to explore new technologies, improved safety measures, and creative insurance solutions to ensure that the night sky continues to light up with celebratory fireworks for years to come.
Make sure you check out the latest industry news and insights at InsurTech and also sign up to our global conference series - Tech & AI LIVE 2024 and InsurTech LIVE 2025
InsurTech is a BizClik brand
