The average value of business interruption claims has risen more than 30% annually over the past two years, and impacts from company closures often dwarf physical damage costs, an Allianz Commercial analysis shows.

The insurer’s business interruption global practice group leader Sarah Versavaud says while the frequency of claims has remained relatively stable, loss severity is a concern.

“Recovery is often taking longer and becoming more expensive, with supply chain constraints, inflation, geopolitical developments and rising mitigation costs all contributing to higher claim values than we saw just a few years ago,” she said.

The average value of a BI claim has risen to more than €850,000 ($1.4 billion) – about 70% higher than the corresponding average property damage amount of nearly €500,000 ($805,070).

The global report examines 7888 business interruption claims valued at about €6.74 billion ($10.9 billion) in the five years to last December.

Fire and explosion was the costliest cause of claims, accounting for more than 40% of the total, followed by natural catastrophes at 34%.

By claim number, natural catastrophes were the leading cause at 26%, followed by water damage, fire and explosion, machinery breakdown, wilful acts such as theft or vandalism, and collisions and crashes. “Other” losses accounted for 16%.

Some natural catastrophe claims are developing over increasingly long periods, with many from Hurricane Helene still unresolved after it struck the US in September 2024.

“Supply chain delays, labour shortages and volatile material costs can extend both recovery and settlement,” the report says.

Ransomware remains the leading cyber disruption cause, but a growing share of loss activity is driven by cloud outages, software failures and incidents at third-party tech providers.

Ms Versavaud says in some cases relatively minor property damage has led to long shutdowns and large BI losses.

“In one recent case, a fire in a small-scale manufacturing unit resulted in relatively limited physical damage yet ultimately disrupted downstream operations and led to a nine-figure group-wide business interruption loss,” she said.

“It is a reminder that, in today’s interconnected manufacturing environment, the severity of a business interruption loss is not always determined by the extent of physical damage.”

The report is available here.