ABSTRACT
The spread of a fire in a building is a complex phenomenon involving timevarying multiple interactions among physical and chemical processes evolved by a variety of burning materials. Hence, the damage likely to be sustained in a fire is a random variable fluctuating widely around an average value. It is, therefore, difficult to provide a sound statistical basis for fire insurance business although actuaries have attempted to develop such a basis during the past three decades. The object of this chapter is to briefly review the statistical problems involved in fire insurance and discuss the calculation of rebates in insurance premiums for deductibles and fire protection measures in industrial fire insurance. The interaction between fire protection and insurance has not received sufficient attention in actuarial literature.
