Companies around the world are increasingly susceptible to larger liability losses and the advancement of technology has the potential to drive a shift in the liability risk landscape, warns Allianz Global Corporate & Specialty (AGCS), a division of Allianz.
After analysing 100,000 insurance claims from more than 100 countries between 2011 and 2016, AGCS reveals that defective product/work, collision/crash, and human error are the three top causes of liability loss, by total value of insurance claims.
Alexander Mack, AGCS Board Member and Chief Claims Officer, said; “Liability losses are ubiquitous and can range from minor incidents to major disasters, always causing third party damage or injury.
“The risk landscape for companies is constantly shifting with liability risks on the rise globally. New technologies such as the internet of things, autonomous mobility or 3D printing will create fundamentally new liability scenarios for companies in almost every sector.”
The analysis shows that large liability losses, where damages exceed $1 billion are becoming more common place, and starting to be seen in regions outside of the U.S. and Europe, driven by tougher regulation, more complex supply chains, and “US-style litigation and compensation awareness spread around the globe.”
Peter Oenning, Global Head of Liability Claims, AGCS, highlighted this point; “We do see a trend towards greater liability claims outside the US with rising awareness of consumer rights and compensation in Asia and Europe.”
Furthermore, insurance companies are experiencing a greater number of large environmental liability losses, says AGCS, especially in the mining and construction sectors, and also in Latin America and Asia.
Adding further complexity, challenges, but also opportunity for insurers and reinsurers is the rise of technology and its influence on the liability risk environment, which, alongside digitalisation is expected to “lead to a further shift in the liability risk landscape,” said AGCS.
Technology brings both challenges and opportunities with regards to the liability risk landscape. While the automation of cars is expected to reduce the frequency of claims overall by improving road safety, companies could become increasingly susceptible to emerging liability risks like cyber, product liability and recall risks.
While “Automation is likely to lead to increased product liability risk for machinery and component manufacturers and software providers, for example,” explained AGCS.
Like the broader risk transfer landscape, the liability risk environment is changing at a rapid pace and technology is likely to drive much of the change along with expanding and developing economies across the world. Increasing exposure to larger and new liability risks could provide reinsurers with an opportunity to provide more capacity and mitigate some of the impact for insurers in the evolving liability risk space.