The increasingly high values at risk in industrial insurance claims are highlighted in a new report from business insurer, Allianz Global Corporate & Specialty (AGCS). In its Global Claims Review 2014, AGCS identifies the top causes of loss and emerging trends from over 11,000 major business claims in 148 countries, each of above €100,000 ($136,455), with which it has been involved between 2009 and 2013.
The analysis shows that nearly 70% of financial losses arise from 10 causes of loss, with the largest single identified cause being ship groundings, reflecting the high values of modern shipping risks, followed by fires and aviation crashes.
Top Causes of Loss by total value (2009-2013, insured losses over €100,000 / $136,455)
3. Aviation crash
6. Bodily injury (including fatalities)
8. Professional indemnity
9. Product defects
10. Machinery breakdown
In 2013, using industry-wide data, the 20 largest losses reported across the insurance industry totalled approximately €5.9 billion ($8.1 billion), excluding those caused by natural catastrophes. Incidents from the oil and gas industry dominate these 2013 major losses, at 40% of the total, while fire and/or explosion was responsible for eight of the top 20 losses or, at approximately €2.9 billion ($4 billion), nearly half of the total loss bill.
So far in 2014, 80% of the major reported losses come from aviation incidents or from fires, particularly in the energy sector with the largest loss – a fire at a Siberian refinery complex in June - reported to be around €586 million ($800 million).
Allianz’s 2009-13 analysis also confirms the high losses seen in the oil and gas sector, which is responsible for the largest insured losses on average at €20.8 million ($28.4 million), over 10 times the average loss of €1.9 million ($2.6 million) reported in this analysis
The growing relevance of business interruption (BI) as a consequence of losses in property insurance, heightened by lean supply chains and globalised manufacturing, is shown with average losses from BI at €997,602 ($1.36 million), 32% higher than those from direct property damage (€755,198 / $ 1,030,505).
AGCS’s Chief Claims Officer, Alexander Mack, commented: “AGCS’s diversified global business gives us unique insights into the sharp end of industrial insurance in terms of current claims experience and future trends - such as the growing importance of business interruption losses. By sharing this analysis, we hope to demonstrate the key role that effective claims service plays in getting businesses back on track when disaster strikes.”
The Global Claims Review 2014 is part of Allianz’s wider Results for the Customer initiative which aims to go beyond the reporting of financial results to report on the delivery of services and benefits for customers. The aim of the Review is to share insights into claims developments and emerging risks, so as to inform clients of focus areas for their businesses.