AGCS (Allianz Global Corporate & Specialty) has identified the top causes of loss for companies from more than 530,000 insurance claims in over 200 countries and territories between 2017 and 2021.
What I like about this report is that it provides actual data on claims, which gives a good indication of major risks. Risk survey research is useful for insights but is usually not as reliable as actual claims.
It would be a good idea to review this report with your business interruption colleagues and assess your risks.
The analysis shows that almost 75% of financial losses arise from the top 10 causes of loss, while the top three causes account for close to half (45%) of the value.
Despite improvements in risk management and fire prevention, fire/explosion (excluding wildfires) is the largest single identified cause of corporate insurance losses, accounting for 21% of the value of all claims. Fires have resulted in more than €18bn worth of insurance claims over five years, according to the analysis.
Natural catastrophes (15%) rank as the second top cause of loss globally by value of claims.
Collectively, the top five causes (based on more than 20,000 claims around the world) – hurricanes/tornados (29%); storm (19%); flood (14%); frost/ice/snow (9%) and earthquake/tsunami (6%) account for 77% of the value of all disaster claims.
Faulty workmanship/maintenance incidents are the third top cause of loss overall (accounting for 9% by value) and are also the second most frequent driver of claims (accounting for 7% by number, ranking only behind damaged goods with 11%). Costly incidents can include collapse of building/structure/subsidence from faulty work, faulty manufacturing of products/components or incorrect design.
The other top 10 causes of loss are: aviation collision/crash (#4; 9%), machinery breakdown (#5; 5%), defective product (#6; 5%), shipping incidents (#7; 3%), damaged goods (#8; 3%), negligence/misadvice (#9; 2%) and water damage (#10; 2%).
The claims analysis highlights the growing relevance of business interruption (BI) as a consequence of losses in property insurance, and the fact that CBI claims have reached a new high over the past year.
The number of contingent business interruption (CBI) claims has increased year-on-year for the past five years, exemplifying the growing interdependence and complexity of corporate supply chains. The automotive industry alone has seen several CBI events during this period, with the overall growth in CBI claims exacerbated in the last two years by a large loss in the semi-conductor manufacturing sector and the ‘Texas Big Freeze’ event.
While not appearing in the top 10 causes of loss, the number of cyber claims has significantly increased over the past few years, driven by the rise of threats such as ransomware attacks, but also reflecting the growth of cyber insurance. AGCS has been involved in more than 1,000 cyber claims in both 2020 and 2021, compared with fewer than 100 in 2016. Claims frequency has begun to stabilize however, albeit at elevated levels.
Find the full report here: https://www.agcs.allianz.com/news-and-insights/news/claims-review-2022.html
