Global Claims Review: Annual Report
Summary
Global claims trends
Claims payments
The top 10 causes of loss
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 over the years, fire/explosion (excluding wildfires) is the largest single identified cause of corporate insurance losses, accounting for 21% of the value of all claims.
During the past five years such incidents have caused in excess of €18bn worth of insurance losses from over 12,000 claims and are responsible for 13 of the 20 largest non-natural catastrophe loss events analyzed. Even the average claim from such an incident totals almost €1.5mn. Claims are becoming more severe due to factors such as higher property and asset values, more complex supply chains and the growth in concentrations of exposures. Costs associated with the impact of business interruption following the aftermath of a fire can significantly add to the final loss total of an incident, given the time it can take to get production back up and running at a large manufacturing plant, while soaring inflation will only challenge claims costs further.
Natural catastrophes (15%) ranks as the second top cause of losses globally by value of claims. Losses continue to rise with climate change and changes to exposures (such as increasing economic activity in natural catastrophe zones).
Analysis of more than 20,000 claims around the world, with an approximate value of €13.7bn, shows that hurricanes/ tornados are the most expensive cause of natural catastrophe loss, accounting for 29% of the value of all claims, driven by the fact that two Atlantic hurricane seasons out of the previous five (2017 and 2021) now rank among the top three most active and costliest seasons on record. Collectively, the top five causes of loss – hurricanes/tornados (29%); storm (19%); flood (14%); frost/ice/snow (9%) and earthquake/ tsunami (6%) account for 77% of the value of all nat cat claims.
Insurers are also seeing new and more unusual loss scenarios. During 2021, the ‘Texas Big Freeze’ in the US and flooding in Germany stand out as events that were both large but had unexpected claims. For example, the ‘Texas Big Freeze’ in February caused huge disruption to infrastructure and manufacturing, with many companies forced into temporary shutdowns by widespread power outages, bringing some large contingent business interruption losses. The event is estimated to have caused economic losses up to $150bn, while Winter Storm Uri caused $15bn in insured losses nationwide.
Top 10 global causes of loss by value of 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). Costly incidents can include the collapse of building/structure/subsidence from faulty work, faulty manufacturing of products/components; or incorrect design.
Aviation collision/crash incidents (9%) are the fourth top cause of losses globally. There are many losses which fall within this category in addition to a major airplane crash however. These include damage to aircraft caused during ground handling incidents; over- and under-shooting runways; making an emergency or forced landing or even damage caused by a bird strike.
Top causes of loss by total value of natural catastrophe claims
How inflation is impacting claims
“Replacement costs more, replacement takes longer”
"Inflation was running hot even before Russia’s invasion of Ukraine, driven by higher commodity prices, supply-chain interruptions, and high energy prices. The war in Ukraine caused further price shocks for a wide range of commodities, energy, and food. As a corporate insurer, we find several specific inflationary trends particularly alarming, and we are closely monitoring how price indices for energy, raw materials, and construction costs are developing because these have an immediate impact on businesses and on potential claims.
It is now much more expensive to repair or rebuild damaged property. The cost of construction is soaring in many countries due to higher prices for energy and raw materials. [...] In addition, materials are not only significantly more expensive but often simply unavailable due to logistics, shipping and supply-chain bottlenecks."
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New claims trends and challeges after the coronavirus outbreak
The coronavirus outbreak has posed a unique test for commercial insurance claims. Historical patterns have been upended, while claims teams have had to maintain service levels during a period of significant operational challenges.
This report from 2020 identifies some of the new claims trends that have materialized as a result of the virus, assesses the prospect for future notification activity and highlights how claims teams have responded in this new environment.
Outlook & trends: Top claims issues to watch
Newsletter
How Allianz Commercial delivers superior claims experience
Global Claims trends to watch in 2022
Thank you for joining our webinar on August 17, 2022
What are the 10 biggest causes of loss suffered by companies around the world over the past five years?
Allianz Commercial Chief Claims Officer Thomas Sepp examined trends and developments in corporate insurance, risk challenges and safety – and what it all means for our customers in a webinar on August 17.
Watch the recording here.