Losses by Business Sector

Aviation

Improvements in airline safety are leading to far fewer catastrophic losses overall, despite 2014’s extraordinary loss activity.

However, the cost of aviation claims is rising, driven by the widespread use of new materials and rising aircraft complexity, as well as more demanding regulation and the growth of liability-based litigation.

While aviation crashes are the top causes of loss in the analyzed data in terms of number of claims and value (23 percent/37 percent), on-the-ground incidents also account for a large portion of claims in number and value (18 percent/15 percent).

Bird strikes are a notable cause of loss, averaging $22.8 million every year (2009-13) with a total of 34 incidents (27 to airlines).

Energy (Oil & Gas)

Higher asset values combined with increasingly complex and interrelated risks mean that the cost of energy claims is increasing. The rising cost of business interruption and emerging risks will also make for a more challenging future environment.

Fire is the number one cause of energy losses in the surveyed claims, both by number and value (45 percent/65 percent) followed by blow-out (18 percent/19 percent). Machinery breakdown, explosion, natural hazards (storm) and contingent business interruption (CBI) are the other main causes of loss identified in the AGCS data.

Liability

Liability claims are becoming more international, complex and costly as awareness of compensation and U.S.-style litigation continues to spread. Although not large in number, personal injury and wrongful death claims resulted in more than 40 percent of the claims costs analyzed. Claims from product defects are already high in volume, while automotive recall cases are also becoming more frequent.

Marine

Rising claims inflation, the growing problem of crew negligence and the high cost of wreck removal have all been contributing to a worrying rise in the cost of marine claims, although frequency of claims (especially from cargo losses) appears to be declining. The Costa Concordia loss in 2012 drives grounding to the top of the causes of loss list by value in the analyzed claims.

Property and Engineering

The cost of large commercial property and engineering claims is rising with the trend towards ever-higher values and risks that are concentrated on areas with exposure to natural hazards. The cost of natural catastrophe claims is likely to rise as the value of assets in hazard zones increases.

Fire is the major cause of property losses in the AGCS data, both by number and value (26 percent/28 percent), with machinery breakdown a large driver of claims in terms of the number generated. Earthquake is the top cause of engineering losses by value (65 percent) while human/operating error number is the most common, generating 30 percent of losses by number.

Source: Allianz Global Corporate & Specialty (AGCS)