Top 10 Causes of Business Insurance Losses

Nearly 70 percent of business financial losses arise from 10 causes of loss, with the largest single identified cause being ship groundings, reflecting the high values of modern shipping risks, followed by fires and aviation crashes, according to a report from business insurer Allianz Global Corporate & Specialty (AGCS).

In its Global Claims Review 2014, AGCS identifies the top causes of loss and emerging trends from more than 11,000 major business claims, with which it has been involved between 2009 and 2013. AGCS analyzed 11,427 claims from 148 countries with a total value of more than $29.3 billion. These claims were for the accident years 2009-2013, each with a total value after deductible of $136,455 or more, and include all its traditional lines of business (excluding Allianz Risk Transfer).

In 2013, using industrywide data, the 20 largest losses reported across the insurance industry totaled roughly $8.1 billion, excluding those caused by natural catastrophes.

Top 10 causes of loss by total value:

1. Grounding
2. Fire
3. Aviation crash
4. Earthquake
5. Storm
6. Bodily injury (including fatalities)
7. Flood
8. Professional indemnity
9. Product defects
10. Machinery breakdown

Incidents from the oil and gas industry dominated the 2013 major losses, at 40 percent of the total, while fire and/or explosion was responsible for eight of the top 20 losses or, at about $4 billion, nearly half of the total loss bill.

So far in 2014, 80 percent of major reported losses come from aviation incidents or from fires, particularly in the energy sector with the largest loss – a fire at a Siberian refinery in June – reported to be around $800 million.

Allianz’s analysis also confirms high losses in the oil and gas sector, which is responsible for largest insured losses on average at $28.4 million, more than 10 times the average loss of $2.6 million reported in this analysis.

Topics Profit Loss Commercial Lines Business Insurance