Allianz Risk Barometer 2021 -
Fire, explosion

While the Covid-19 pandemic has introduced a newcomer to the most important business risks in the Allianz Risk Barometer, pushing fire and explosion perils slightly down the rankings compared to previous years, they still rank among the top 10. And with good reason.

Large-scale events such as the devastating explosion in the port of Beirut, Lebanon in August 2020, which has resulted in total damages of up to $15bn, according to industry estimates, and around $1.5bn in insured losses to date, or the catastrophic explosion in the port of Tianjin in China five years ago, which caused insured losses estimated between $2.5bn and $3.5bn, remind both industry and the general public of the terrible impact industrial fires and explosions can have.

In many cases it’s not even the material damage of such an incident – although this is often costly – that results in the biggest losses. A major fire or explosion can prevent companies from servicing their customers or resuming operations for some time and such incidents are the most frequent drivers of business interruption claims in particular. In fact, fires and explosions were the number one cause of losses for businesses worldwide over a fiveyear period up until the end of 2018, according to Allianz analysis, causing in excess of €14bn ($15.7bn) worth of insured damage from more than 9,500 claims.

While risk assessment continues to evolve in respect of fire and explosion, it is unlikely that such risks can ever be completely eliminated. Prudent fire mitigation practices – regularly assessed and updated – including preventative measures, fire extinguishing methods and contingency planning therefore remain essential for all businesses to lower the risk of loss from an incident.