Fires and explosions top causes for global corporate insurance spend: report

Fire and explosions lead to the largest claims for insurers and the businesses they cover, and the Asia-Pacific region is seeing growing exposure to business claims, a recent report from Allianz showed.

The findings were revealed by Allianz Global Corporate & Specialty (AGCS), a dedicated corporate and specialty insurance business, in its latest global claims review. Around 470,000 claims from over 200 countries over the past five years were looked into, totaling approximately 58 billion euro (US$66.5 billion).

The research indicated that over three quarters of financial losses globally arise from 10 major causes, with damage caused by fires and explosions, aviation incidents, faulty workmanship or maintenance, and storms accounting for more than half.

Among these, fire and explosion incidents are the top cause of corporate insurance losses globally, making up for almost a quarter (24 percent) of the value of all claims, the report said.

Besides, costs associated with the impact of business interruption following the aftermath of a fire can significantly add to the final loss total, the German insurer noted. According to data, fires resulted in more than 14 billion euro worth of insurance claims during the report period.

In terms of regions, the Americas, driven by the USA, continues to be the largest corporate insurance market in terms of both number of claims generated (57 percent) and the overall value of claims received (35 percent).

However, AGCS pointed out that claims activity in Africa and Asia are likely to increase further in the future, as the Asia-Pacific area is witnessing a rising proportion of the losses, contributing to 17 percent of the total value of global claims and 6 percent of total claims by number.

In particular, financial lines and liability claims in the region are increasing in size and frequency as regulators step up their activities, introducing tougher environmental and consumer protection regulations, the research added.

For China, fire is also the top contributor of enterprise losses, leading to 65 percent of all claims by value. Large industrial blazes like the Tianjin explosions in 2015, which severely disrupted the port and container storage stations and impacted multiple businesses, resulted in heavy losses and a large volume of insurance claims.

“In today’s interconnected and globalized business environment, financial losses are increasing due to the geographical concentration of values — often in risk-exposed areas — and from the knock-on effects of global supply chains and networks,” Philipp Cremer, global head of claims at AGCS said.