Notwithstanding all technological advances, fire remains the most costly of all hazards for businesses. In an analysis of 530,000 claims reports in industrial insurance worldwide, fires and explosions were at the top with a share of over one fifth, as the Allianz industrial insurer AGCS announced on Tuesday. “We’ve had a figure of 18 billion euros over the last few years,” said Thomas Sepp, the board member responsible for claims processing. This does not include forest fires.
In total, the 530,000 industrial damage reports from over 200 countries and territories totaled almost 89 billion euros over a five-year period from the beginning of 2017 to the end of 2021. Allianz assumes that high inflation will continue to drive up the damage – simply because material and personnel costs become more expensive for repairs.
In second place behind explosion and fire was natural disasters with a 15 percent share of total damage, followed by human error with 9 percent. This includes the incorrect operation of machines as well as construction defects or poor product design.
Risk spread over several insurers
In the industry, syndicate agreements are usually concluded with large corporate customers, so that several insurers share the risk and income. That is why the large data pool with damage reports from all over the world was available to AGCS.
These three most common damage categories account for 45 percent of total damage worldwide. Fire also came first in the more than 47,000 industrial claims reported in Germany, although the fire protection regulations in this country are stricter than in many developing and emerging countries.
Not among the global top ten are hacker attacks, the number of which has increased sharply worldwide. This in turn means that many insurance companies are extremely cautious before insuring a company against cyber attacks.
Insurance against hackers not so easy
Many companies would therefore like to insure themselves against hackers, but do not get a policy because they have not upgraded their IT as required by the insurers. “We are currently rejecting around three quarters of all inquiries in Germany,” said Sepp.
According to AGCS, the damage caused by business interruption, for example when a company is temporarily idle due to fire, water or a storm, is also becoming increasingly expensive. The AGCS did not give any absolute figures, but the average damage per case has increased from 3.1 to 3.8 million euros within the five years.
If the feared stop in Russian gas supplies next winter should cause factories and businesses to stand still, according to the Allianz manager, this would usually not be an insured event: “The absence of raw materials or energy – or delays in it – is not insurable Event under a normal business interruption, »said Sepp.
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