Rapid increase in natural catastrophes is already hitting global supply chains…(12…)

Wednesday, April 17, 2019
By Paul Martin

Apr 17, 2019

A worldwide increase in natural catastrophes is already hitting global supply chains and causing a spike in business interruption insurance claims, a senior executive with Allianz Global Corporate & Specialty has warned.

AGCS chief regions and markets officer Sinead Browne said this trend, which she directly linked to climate change, was pushing premiums up around the world, adding this “correction” was likely to continue for the “next few years”.

While property damage is the most obvious effect of extreme weather events, Ms Browne said business interruption resulting from these events was proving costlier, claim for claim, than property damage.

“The average business interruption claim that we pay out is €3 million, versus a property damage claim of €2 million,” Ms Browne, who is based in the UK but has responsibility for the Australian arm of the business, said.

Ms Browne said global interconnectedness including Asian countries being used for low-cost manufacturing was pushing premiums up around the world. “We’re seeing what we would call corrections, which means an upwards movement in insurance pricing following many, many years of downward pricing movement. That’s absolutely a global trend,” she said.

“If we look at natural catastrophe events, we’ve seen over the last two years very heavy events not just in the US but also in Asia. That is of course driving unprofitability into global portfolios which then requires remediation action, leading to pricing increases.“

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