The reason? It had used highly flammable expanded polystyrene sandwich panels in the construction of its warehouse.
It was not alone. Food manufacturers, retailers and logistics companies all over the UK have been hit by massive hikes in insurance premiums because they have used cheaper but flammable versions of composite panels. Some have reportedly seen increases of 800%. Spiralling costs prompted calls for guidelines and next week the Association of British Insurers publishes the first comprehensive research into the fire performance of sandwich panel systems. It will argue that hikes were inevitable given that many insurers had effectively charged too little for insurance in the 1990s.
The real problem, it will add, is not that food companies use sandwich panels, but that they failed to implement effective risk management strategies. Jane Milne, ABI head of property, says: "Some of the bigger food companies are not at risk, because they have tight risk management strategies. But things can go wrong for smaller businesses."
Sandwich panels are used more in the food sector than in any other because of the need for heated or chilled facilities.
Milne concedes that insurers have been in belligerent mood post-September 11 and the collapse of Independent Insurance. The situation has been aggravated by the decision by fire services not to enter a warehouse with sandwich panels unless they believe someone is trapped in the building.
But, food companies could do a lot more to alleviate the problem, she insists. They should make sure they choose the right sort of panels, for instance. Kingspan, one of the leading manufacturers of sandwich panels, has developed the Firesafe range which is certified by the Loss Prevention Council. And the ABI itself recommends use of panels filled with mineral wool, which is more fire-resistant. Companies should also build compartments, where appropriate, to control the spread of fire,prevent oil and grease build-up, make sure electrical equipment is well maintained and ensure there are no holes in panels through which fire can spread.
Most importantly of all, they should undertake a risk assessment and have it independently verified. Milne adds: "We don't reach the conclusion that sandwich panels are uninsurable and have not investigated the use of different materials in construction. We're arguing for a proper dialogue about how sandwich panels are managed."
She says that many businesses would have had big increases not only because of sandwich panels, but because of the rising cost of personal injury claims.
The ABI holds a seminar on June 27 to identify areas where guidance is needed. It also wants to negotiate with the government the level of guidance that needs to be statutory in light of the forthcoming fire regulations White Paper.
None of this is likely to reassure the businesses that have been devastated by the recent hikes. Bob Tennuci, group risk insurance manager for Wincanton, the logistics company, argues that it is the smaller businesses that are really suffering: "We can pass on the costs to our customers ­ and there are always ways to mitigate the costs. But SMEs can't do that easily."
Helen Molyneux, head of the claims management unit at Eversheds, goes a step further. "It's putting smaller companies out of business. It used to be cheaper to take out insurance than replace the panels. Now it's almost the other way round. Companies are now having to balance the cost against the risk of not insuring."
Insurance costs have risen so much that the likes of Sainsbury and Tesco are said to be insuring themselves ­ Tesco is reported to have agreed to an excess of £50m on its policy.
If the big players are struggling, what will it mean for the SMEs if they do not get effective guidelines?