They do happen and the results can be devastating. Injury or death and vessel damage or loss are preventable in most cases.
"The majority of engine room fires are the result of ignition of oil mist.".
IMO (International Maritime Organization)
The majority of fires which have occurred in engine rooms are generally caused by a leak or fracture from a flammable liquid system. Most engine room fires begin as a result of the ignition of oil mist.