- Projects are increasingly complex, often with values in the tens of billions of dollars, and can run for decades.
- Fire and explosion incidents most expensive losses globally. Defective product and business interruption claims rising. Trade disputes growing concern.
- New tech such as drones, satellite imagery and laser scanning helping to better identify risks, cause of loss, and speed up claims.
Large engineering and construction projects have changed beyond recognition in recent decades. Whether it is an airport, a power plant or a car manufacturing complex, sites are now much larger, more complex and more expensive, meaning more is at stake if things go wrong.
Analysis by Allianz Global Corporate & Specialty (AGCS) of more than 13,000 engineering insurance claims over the last five years has identified seven major trends in engineering and construction projects, driving some of the largest losses ever, according to a new report by the insurer. The report also examines how new technologies, such as drones, satellites, lasers, and computer modeling, are increasingly being used to speed up claims and mitigate risks:
1. Higher values bring bigger loss impact
2. Fire/Explosion top cause of losses. Nat Cats most serious risk concern
3. Defective product and quality control losses on the rise
4. Greater supply chain complexity increasing size and cost of claims
5. Number of business interruption/delay in start-up claims growing
6. Political risk and sanctions a growing concern for long-term projects
7. Growth of renewable energy projects brings challenges as well as benefits
Increasing roles of drones and new technology in risk and claims assessment
As large engineering and construction projects have become more complex, assessing risks and claims and establishing the ultimate cause of loss has become much more difficult. However, insurers have an increasing array of new technology at their disposal to offer support:
- AGCS recently utilized drones, laser scanning, and computer modeling to determine the root cause of a machinery explosion at an inaccessible site. Drones and satellite imagery were also used to assess engineering claims after record wildfires in California and Hurricane Florence in 2018.
- AGCS is coupling 3D topographical data from drones with hydrogeological modeling software and rainfall simulation data to predict flash flooding risk on construction sites.
- Satellite technology offers high resolution images of a site within 24 hours of a loss, even at remote or hazardous locations. It can also be used to combat exaggerated or fraudulent claims.
“Technology will create more certainty for engineering claims,” says Hogendoorn. “There are so many parties on a site at one time, and so many activities happening simultaneously, it can be extremely difficult to understand the sequence of a loss event. However, we can increasingly use technology to access data and information to better understand the root cause of loss and speed up the claims process.”
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About Allianz Global Corporate & Specialty
Our customers are as diverse as business can be, ranging from Fortune Global 500 companies to small businesses, and private individuals. Among them are not only the world’s largest consumer brands, tech companies and the global aviation and shipping industry, but also wineries, satellite operators or Hollywood film productions. They all look to AGCS for smart answers to their largest and most complex risks in a dynamic, multinational business environment and trust us to deliver an outstanding claims experience.
Worldwide, AGCS operates with its own teams in 33 countries and through the Allianz Group network and partners in over 200 countries and territories, employing over 4,400 people. As one of the largest Property-Casualty units of Allianz Group, we are backed by strong and stable financial ratings. In 2018, AGCS generated a total of €8.2 billion gross premium globally.