How Much Have Fire Sprinklers Saved? Examining the Economic Impact of Fire Sprinklers
By Jon Nisja
In the realm of fire safety, fire sprinkler effectiveness is unmatched. These unassuming yet powerful devices have long been hailed as the first line of defense against the devastating effects of flames and smoke. By rapidly dousing fires and providing vital time for evacuation and intervention, they have unquestionably saved countless lives. But beyond the immeasurable value of human life, a burning question arises: what has been the economic impact of fire sprinklers? Delving into this intriguing intersection of safety and economics unveils a fascinating landscape where the monetary benefits of these systems become an essential consideration for both public and private sectors alike. In this article, we explore the pivotal role fire sprinkler systems play in mitigating fire-related losses, delving into the economic implications and unveiling the hidden cost savings they have secured.
Measuring Fire Sprinkler Effectiveness
Fire protection is typically assumed to have one of four goals:
- Saving lives
- Protecting property
- Ensuring continuity of operations (minimizing business disruptions)
- Minimizing environmental impact
Three of these four goals tend to be financial in nature (protecting property, ensuring continuity of operations, and minimizing environmental impact).
History tells us that the first practical fire sprinkler was developed by Henry Parmelee to protect his New Haven, Connecticut piano factory in 1874. While it is assumed that Parmelee’s goal was protecting his property, it is possible that he was also looking to minimize any business interruptions from a fire.
If we fast-forward almost 150 years from 1874 to 2023, we find that financial considerations are still an important part of fire sprinkler protection.
Examining the Economic Impact of Fire Sprinklers
The NFSA looked at the data from the National Fire Incident Reporting System (NFIRS), a compilation of the reports that fire departments provided on sprinkler-controlled incidents they responded to over a five-year period of time (2017-2021). There were over 6,000 fires in NFIRS during this five-year period that contained:
- Pre-incident value for the building and contents of $100,000 or more,
- Loss or damage estimates for the building and contents.
The total pre-incident building and contents value protected with sprinklers was $64.354 Billion while the loss sustained to the building and contents was $837.3 Million. That equates to 98.7 percent of the value of the buildings and contents surviving or being “saved” (save ratio). By contrast, the National Fire Protection Association (NFPA) estimates that the total building and contents fire loss averages about $12 Billion each year. $12 Billion per year for 5 years equals $60 Billion (vs. $837.3 Million in sprinkler-protected buildings).
A Deeper Look at the Data
The following table provides a more detailed look at the economic impact of fire sprinklers. Fire sprinkler systems have proven highly effective in minimizing losses from fire incidents. The data showcases their impact, with a total value of protected buildings and contents amounting to $64.35 billion. Remarkably, the total loss incurred stands at just $837.33 million, resulting in a low loss ratio of 1.3% and an impressive save ratio of 98.7%. On average, each protected building and its contents have a combined value of $10.43 million, with an average loss of $135,842. These figures highlight the substantial cost savings achieved by fire sprinkler systems, solidifying their crucial role in mitigating financial losses.
| Measure | Value |
| Building Value | $ 47,286,625,957 |
| Contents Value | $ 17,067,836,343 |
| Total Value (Building and Contents) | $ 64,354,462,300 |
| Building Loss | $ 415,819,159 |
| Contents Loss | $ 421,508,847 |
| Total Loss (Building and Contents) | $ 837,328,006 |
| Loss Ratio | 0.013 (or 1.3%) |
| Save Ratio | 0.9869 (or 98.7%) |
| Average Building and Contents Value | $ 10,425,150 |
| Average Building and Contents Loss | $ 135,842 |
| Loss Ratio | 0.013 (or 1.3%) |
| Save Ratio | 0.9869 (or 98.7%) |
Leading Occupancies Protected
The following chart shows the top occupancies based on their total value that sprinklers protected along with their loss and save ratios.
| Occupancy | Value | Loss | Loss Ratio | Save Ratio |
| Multifamily dwellings | $ 16,782,234,896 | $ 129,706,908 | 0.8% | 99.2% |
| Manufacturing, processing | $ 14,926,433,988 | $ 231,104,774 | 1.5% | 98.5% |
| Hospital – medical or psychiatric | $ 3,900,700,857 | $ 8,103,773 | 0.2% | 99.8% |
| Hotel/motel, commercial | $ 3,581,369,473 | $ 58,413,748 | 1.6% | 98.4% |
| Warehouse | $ 2,832,318,006 | $ 56,809,639 | 2.0% | 98.0% |
| Laundry, dry cleaning | $ 1,574,325,220 | $ 2,474,411 | 0.2% | 99.8% |
| High school/junior high/middle school | $ 1,443,386,289 | $ 4,072,250 | 0.3% | 99.7% |
| Post office or mailing firms | $ 1,443,000,000 | $ 1,520,000 | 0.1% | 99.9% |
| Restaurant or cafeteria | $ 1,319,431,858 | $ 15,425,849 | 1.2% | 98.8% |
| Business office | $ 1,236,517,150 | $ 16,243,403 | 1.3% | 98.7% |
| 24-hour care Nursing homes | $ 1,177,361,493 | $ 8,402,142 | 0.7% | 99.3% |
| Industrial plant yard – area | $ 1,113,788,900 | $ 5,909,030 | 0.5% | 99.5% |
| Stadium, arena | $ 1,038,953,900 | $ 120,153 | 0.0% | 100.0% |
| Fixed use recreation places, other | $ 820,625,294 | $ 496,700 | 0.1% | 99.9% |
| Department or discount store | $ 796,245,828 | $ 28,329,226 | 3.6% | 96.4% |
| Mercantile, business, other | $ 700,220,584 | $ 31,035,726 | 4.4% | 95.6% |
| Doctor, dentist or oral surgeon’s office | $ 551,000,300 | $ 2,885,000 | 0.5% | 99.5% |
| Food and beverage sales, grocery store | $ 550,036,761 | $ 8,157,407 | 1.5% | 98.5% |
| 1 or 2 family dwelling | $ 483,545,373 | $ 14,425,303 | 3.0% | 97.0% |
| Household goods, sales, repairs | $ 416,151,442 | $ 11,422,240 | 2.7% | 97.3% |
Business Continuity
According to the Federal Emergency Management Agency (FEMA), 40 percent of small and mid-sized businesses never reopen after a natural disaster (including a fire) and an additional 25 percent reopen but fail within a year. Another way of looking at this is that almost 2/3rds of the businesses sustaining a major fire will no longer exist a year later. Contrast that with a relatively minor 1.3 percent loss where sprinklers controlled a fire.
The NFSA’s Research Proves the Beneficial Economic Impact of Fire Sprinklers
Fire sprinkler systems have been around for almost 150 years and they have been shown to reduce fire loss. Fire incident reports show that fire sprinklers have protected billions of dollars’ worth of property and contents each year. The loss ratio in sprinkler-controlled fires is just over 1 percent of the value of the building and contents. The chance of a business not re-opening after a significant fire is very high and even some that re-open after a fire do not stay in business long-term. Fire sprinklers are a proven means of minimizing property loss and ensuring continuity of operations.
For more information on the effectiveness of fire sprinklers, or to learn more about the economic impact of fire sprinklers, visit our resources page to learn more.
Jon Nisja is a Data and Fire Protection Specialist with the National Fire Sprinkler Association (NFSA). Prior to working for NFSA, Jon served as a fire marshal since 1985 in two communities and as a state fire safety supervisor for the Minnesota State Fire Marshal Division. From 2005-2022, he supervised the State Fire Marshal’s fire protection, training, and data teams. He is the past president of both the Fire Marshals Association of Minnesota and the International Fire Marshals Association. Jon can be contacted at nisja@nfsa.org.
