The report focused on global developments in claims from business insurers and based its findings on the analysis of more than 470,000 business insurance claims with a total value of 66.5 billion USD from 206 countries and territories. Not only did fire and explosion top, but these risks also led to a considerable margin, accounting for 24% of the value of all claims.
"It is mainly [because of] two factors – one of them is the high concentration of value, "said Philipp Cremer, Allianz's global claim claims," and also the ever-growing business interrupt feature of the claim. With the way production companies organize themselves, there is an increasing dependence on the production chain, as a result of which the claims for trading loss increase considerably. "
Fire and explosion include events such as building or factory fires, electric fires, gas explosions and vehicle fires, as well as turbine explosions and vineyard fires. The costs associated with the impact of business interruptions following a burn-out of one of these fires are high, with events that resulted in more than US $ 16 billion in claims over the five-year period, according to the report.
Secondly, 14% of the value of the analyzed claims was aviation collisions and crashes.
"For aviation, the image is twofold: Firstly, flying has become much safer for all of us, so there are far fewer air accidents with fatalities," explains Cremer. "On the other hand, any losses have become more expensive – air traffic has steadily increased, airports have become very busy," and the new generation of aircraft is much more expensive to repair because of the materials used for building aircraft. In turn, the average cost of repair increases and that has been a major reason for the seriousness of the average losses in the AGCS aviation portfolio. However, Cremer added that the company is the world's leading aviation insurer, meaning that the figures do not necessarily represent the total insurance market.
Specific industries are particularly noteworthy because of the extent of the losses they have suffered, such as the energy sector.
"The energy sector has suffered considerable losses, and here too it is a high concentration of values and the volume of business interruption that drives losses," Cremer said. "The pharmaceutical sector is another where liability claims can be very important, so they are very different scenarios for different sectors."
Although they were not at the top of the list, weather-related events were responsible for one notable cause of losses: storms that accounted for 7% of the value of claims. While the trifecta of hurricanes was intense in 2017, the four previous years had been calmer at the front of the disaster, although Cremer told Insurance business that there is no doubt that worldwide exposure to natural disasters is increasing.
"We have more and more values in coastal areas and the interdependence of production chains in the globalized economy shows that as a company you do not really have to be in the disaster zones to have a loss," he said. said. "It is sufficient to place one of the most important suppliers in the flood or storm zone and then suffer a contingent loss of business interruption, which is why natural disasters such as exposure are certainly more important to the economy as a whole."
As far as cyber is concerned, the leader of Allianz believes that losses resulting from this risk will eventually become a major cause of losses – the only question is when. Although the major cyber events that hit the headlines often indicate how much consumer data is exposed to hackers, it is sometimes due to internal software failures that an airline's booking system is not working, or a computer network that checks machines for a faulty assembly line, which then also results in business interruption losses.
Read more: This is the new frontier of cybercrime
In the meantime, while risks are accumulating and companies need to be aware of traditional dangers and emerging risks, Cremer says that Allianz policyholders are constantly improving their risk management strategies.
"There's no lack of attention there, what I think is still an area where companies can analyze further and take precautionary measures is in their supply chains [and] Conditional business interruptions, "he said." Understanding the supply chain and finding ways to make it more resilient, I think, is for both our policyholders and for us, something that is still an area to work on. Large companies have thousands and sometimes tens of thousands of suppliers, so it is a very complex task. "
The damage figures stated in the Global Claims Review are 100% of the total loss and the dataset not only includes the AGCS share, but also the share of other insurance companies involved for the specific risk.