After seven years at the top, BI drops to the second position globally in the Allianz Risk Barometer. In Nigeria, BI leaped from seventh to third this year and is #1 in Africa and Tanzania; #2 in Cameroon and South Africa and #4 in Ghana. The trend for larger and more complex BI losses continues unabated. Causes are becoming ever more diverse, ranging from fire, explosion or natural catastrophes to digital supply chains and political violence. “Digital supply chains and platforms today allow for full transparency and traceability of goods but a fire at a data center, a technical glitch or a hack could bring large BI losses for multiple companies that all rely and share the same system and which cannot switch back to manual processes,” says Raymond Hogendoorn, Global Head of Property and Engineering Claims at AGCS.
Businesses are also increasingly exposed to the direct or indirect impact of riots, civil unrest or terrorism attacks. The past year has seen civil unrest in Nigeria, Ethiopia, Mali, Cameroon, Niger, Sudan, Guinea, South Sudan and Somalia to name but a few with some resulting in property damage, BI and general loss of income for both local and multinational companies.
Changes in legislation and regulation (#3 with 27%) and Climate change (#7 with 17%) are the biggest climbers globally underlining the US-China trade war, Brexit and global warming as increasing concerns for companies and nations. In Nigeria, Changes in legislation and regulation (24%) moved down to joint fifth with Critical infrastructure blackouts. Critical infrastructure blackouts features prominently in the region at #7, in Cameroon at #2, in Ghana at #4, in South Africa at #5 and in Tanzania #5. According to Africa Energy Outlook 2019, a typical Nigerian firm experienced more than 32 electrical outages in 2018. These outages can vary in duration from less than one hour to more than a day, and in some countries they cost firms as much as a quarter of potential annual turnover and up to 2% of annual GDP.
Fire, explosion returns the top 10 rankings in Nigeria at #7 with 23% (sixth globally and fifth in the region) of responses while Political risks and violence moves down to ninth with 16% of responses. Fire, explosion is the number one cause of financial losses based on the results of insurance claims analysis by AGCS. Such events have caused in excess of €14bn ($15.7bn) worth of losses over a five-year period through 2018 – accounting for almost a quarter (24%) of the value of more than 470,000 claims examined by AGCS. This is significantly ahead of the second top cause of loss, aviation collision/crash incidents (14%). Even the average insurance claim from a fire totals almost €1.5mn ($1.65mn). Despite the decrease in a number of responses for Political risks and violence, it continues to be an ever-rising threat of political violence and terrorism particularly in Nigeria, in the region (#9) and around the world sparking higher interest in the specialty insurance market among companies that are worried about its impact on their supply chains and the threat of business interruption. However take up is low exposing companies’ supply chain business interruption risk.