Top causes of loss for companies

Over the past five years, fires and explosions, natural catastrophes, and faulty workmanship or maintenance have been the major causes of loss by value of insurance claims. This information has been released in the Global Claims Review 2022 report from global corporate insurance carrier Allianz Global Corporate & Specialty (AGCS).

“Insurance claims from companies have become more severe over the past five years due to factors such as higher property and asset values, more complex supply chains, and the growing concentration of exposures in one location, such as in natural catastrophe-prone areas,” says AGCS chief claims officer and board member Thomas Sepp.

In one of the industry’s most comprehensive analyses, AGCS has identified the top causes of loss for companies from more than 530 000 insurance claims from over 200 countries and territories between 2017 and 2021. The insurance carrier has been involved in all of the claims reviewed; typically a number of insurers provide coverage jointly, considering the huge values at stake in the corporate sector. These claims have an approximate value of €88,7 billion, which means that the insurance companies involved have paid out over €48 million on average every day for five years to cover losses.

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, fires and explosions (excluding wildfires) represent the largest single identified cause of corporate insurance losses, accounting for 21% of the value of all claims. Fires have resulted in more than €18 billion in insurance claims over the five years, according to the analysis, with a claim average of €1,5 million.

Fires generate the most expensive losses for South African businesses as well, accounting for more than 60% of the value of all claims over the past five years. Faulty workmanship incidents are another major cause of loss (20%) while natural catastrophes rank third, with storm losses the most frequent driver of these claims.

“South Africa experienced three major claims events in the past three years: Covid-19 business interruption following the nationwide hard lockdown, as well as civil unrest and flooding. It’s no surprise to see fire, natural catastrophe, storm, and water damage accounting for the majority of the value of all claims in the country. Faulty workmanship incidents are another major cause of loss. As a corporate insurer, AGCS plays a vital role in ensuring any disruption following a loss event is minimised,” says Lulu Pule, AGCS head of claims in South Africa.