How Canada’s costliest perils compare to the rest of the world

The fire/explosion peril continues to crux Canadian insurers, accounting for 38% of all corporate insurance losses by value of claims, according to Allianz Global Corporate & Specialty’s (AGCS) Global Claims Review 2022.

Natural catastrophes peak as Canada’s second highest major driver of loss at 8% by total value of claims, followed closely by faulty workmanship/maintenance (8%).

Aviation collision/crash (6%) and defective product (6%) follow suit to round out Canada’s top five causes of loss by total value of claims. Unspecified “other” causes of loss account for 34% of the value of all claims.

These results mirror global trends, with fire/explosion (21%), natural catastrophes (15%), faulty workmanship/ maintenance 9%, aviation collision/crash (9%) and machinery breakdown 5% constituting the top five global causes of loss by value of claims.

Despite improvements in risk management and prevention, fire/explosion (not including wildfire) remains the largest identified cause of corporate insurance losses, the report explains.

The average claim from a fire/explosion incident reaches almost ₤1.5 million (about Cdn $1.9 million)—up from ₤494,592 (about Cdn$750,065) in 2018.

“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 nonnatural catastrophe loss events analyzed,” the report reads.  

“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.” 

While NatCats peak as Canada’s second highest major driver of loss, flood accounts for 33% of all natural catastrophe loss by value.  

“Water damage incidents, such as the flooding of buildings from burst pipes, are the most frequent driver of claims, accounting for around a quarter by number but total less than four per cent by value,” the report reads.  

Comparatively, hurricane/tornado (29%) constitutes the top cause of loss by total value of NatCat claims across the globe, followed by storm (19%) and flood (14%).  

Feature image by iStock.com/Jag_cz