According to the AGCS Global Claims Review 2022, built on the analysis of more than 530,000 insurance claims from 2017 to 2021, with a total value of €88.7bn (about $90.4 billion), which caused losses in North America in the last five years. years were natural disasters and fires/explosions.
Specific to natural disasters, the AGCS found that hurricanes and hurricanes are the most damaging, led by the fact that the last five Atlantic hurricane seasons (2017 and 2021) are now among the three most active and costliest in history, as well as events the latest on the storm. Both Canada and the US have also experienced major fire seasons in recent years, as well as frequent floods.
Read the following: Flood insurance hike will drive a million out of the market – FEMA report
Frank Sapio, head of AGCS North America claims, said it was “not surprising” that natural disasters topped the list, given the increasing frequency and severity of climate change across the region. The head of the claim also said that he does not see this improving in the near future due to climate change.
“I think knowledge is the biggest asset we have in reducing the risk of climate change,” Sapio told Insurance Business. “Reports like the AGCS Global Claims Review 2022 help risk managers understand how a loss can affect their operations. If we can inform the risk management team how to reduce and how to identify exposure, that’s half the battle. The other half of the battle is having a safety culture and understanding what to do after a loss. .”
Despite the changes in accident management and fire protection over the years, fire/explosion (except for wildfires) is the main cause of damage to corporate insurance worldwide, which accounts for 21% of the total cost, according to AGCS research. Again, Sapio said “no surprises there”.
“Fires and explosions are often caused by human error, whether it’s operational failure or design failure,” he said. “What should we do in this situation?” Again, there is no magic bullet for this. Whenever people are involved in a project, there will be failures and those failures will lead to loss. It’s a matter of continuing education and risk reduction activities, such as loss control assessments, pre-loss and loss assessments, and more. “
Read the following: Climate risks: The need for education, risk reduction, and insurance
What was surprising in the five years from 2017 to 2021 was the emergence of the novel coronavirus (COVID-19) and the global pandemic, which caused a significant economic downturn, as well as an astronomical change in the way businesses operate. . Russia’s invasion of Ukraine is an ongoing war with another way for businesses, and their insurers, to deal with it.
“It shows that when you think you have it all figured out, and you know what the year is going to be, you never know,” Sapio said. “The COVID-19 pandemic and the war in Ukraine were both threats that came quickly, and the whole world had to adapt.
“The COVID situation had an incredible impact on our claims because the volume was down because of the recession, but it also brought a lot of uncertainty to the industry. It was the same with the war in Ukraine. It didn’t affect the volume of our claims, but it did affect inflation and other things. It came out of the blue , and we had to deal with it very quickly. If we’ve learned anything, it’s how quickly we can adapt to a changing environment.”
One of the main takeaways from the AGCS Global Claims Review 2022 for brokers is the impact of rising inflation. Property and construction insurance claims, in particular, face inflation, because reconstruction and renovation are linked to the cost of goods and services, while shortages and long delivery times lead to business interruption (BI).
Other lines of insurance, such as directors and officers, professional indemnity and general liability, may also face inflationary pressures due to higher legal defense costs and higher claims.
“Businesses need to make sure their customers understand the importance of properly evaluating their assets, and the risks of having insurance,” Sapio said. “More and more insurance providers are starting to include insurance clauses in their contracts [in response to] claims increase when there is a significant difference between the declared value of the insurance and the actual replacement value. This is also a good opportunity for brokers to talk to clients about loss control and pre-emptive measures to reduce or eliminate exposure. “