’Property damage and business interruption losses are now likely to be significantly higher than before Covid-19,’ says director
Business interruption, supply chain disruption and natural catastrophes rank as the top risks for the construction and engineering sector, according to the Allianz Risk Barometer.
The energy crisis, the Ukraine war and inflation were also new entrants on the list, with disruption looking set to continue in 2023, according to the report.
It comes as the construction industry faces a number of challenges, including the prospect of a recession, the shortage and rising cost of energy and a spike in procurement costs.
Blanca Berruguete, global industry solutions director for construction at Allianz Global Corporate and Specialty (AGCS), said: “Larger values are at risk for companies. Construction costs are soaring because of the higher prices for energy and raw materials. Replacement is costing more and taking longer.
”Materials can also often be unavailable due to logistics, shipping and supply-chain bottlenecks.
”The result is that any property damage and business interruption losses are now likely to be significantly higher than before Covid-19.”
Biggest losses
Regarding actual claims patterns, fires and natural disasters were the top contributors to construction and engineering losses, according to AGCS analysis of 22,000 insurance claims worth €12.8bn over five years from 2017 to the end of 2021.
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Fire was the most expensive cause of loss, accounting for 27% of the value of claims analysed.
Natural catastrophes accounted for almost a fifth of claims by value (19%) and were also the most frequent cause.
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