Global Claims Review 2022

The report highlights the increasingly high values at risk in corporate insurance claims. AGCS has identified the top causes of loss and emerging trends from more than 530,000 insurance industry claims in over 200 countries and territories with which it has been involved between 2017 and 2021. These claims have an approximate value of €88.7bn, which means that insurance companies have paid out – on average – over €48mn every day for five years to cover losses – outlining the important role the sector has to play in helping businesses manage and mitigate such perils.

Claims payments can vary enormously in scale reflecting the widespread nature of the risk landscape. Significant corporate insurance claims (>€100mn) such as those arising from fires, aviation crashes or shipping incidents for example, account for fewer than one per cent of claims by number, but for more than a quarter (€24.6bn) of the total value of all claims analyzed. Conversely, around 88% of claims are valued at or below €50,000, accounting for just three per cent of total value.

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.