In its Global Claims Review 2014, Allianz Global Corporate & Specialty (AGCS) identifies the top 10 causes of loss and emerging trends from over 11,000 business claims in 148 countries. For personal insurance solutions check out our sister company Orlando Insurance Center. As the saying denotes – excess of everything is bad, your office … These types of losses in accounting terms can also be triggered by theft, damage to products and the losses associated with events such as an increase in rent. Financial distress is a situation, which makes the company’s survival difficult. A firm experiences financial distress when it defaults the external obligations. Financial loss can have catastrophic effects on mental health and relationships, and even physical health. Lack of Cash Flow. Around a third of large corporate liability claims involve litigation, compared with property insurance where less than one percent of claims do, on average. Causes of Business Risks. A casualty business loss can be triggered by events such as hurricanes, floods, earthquakes and other natural disasters that cause the loss of equipment and property. If … Business failure. So, here are some of the common causes of financial loss in business, and some general suggestions on how to avoid them. All rights reserved. According to Allianz Global Claims Review here are the top 10 causes of loss and emerging trends from over 11,000 business claims in 148 countries. storms. Top ten causes of financial loss for businesses. Accountants say a business should have a balance sheet to support three to six months of payroll and fixed expenses, to maintain a cushion for any unforeseen loss or crisis. 10. For example, autonomous vehicles would see a shift in liability and claims from drivers to manufacturers and software providers,” according to Peter Oenning, liability claims specialist at AGCS. Here are a couple of other quick takeaways from the claims review: In general, litigation is involved in far more liability claims than property claims, with one third of all liability claims involving litigation. Combined Bank Accounts. ... and may find it difficult to take holidays in the early days of running a business. 10. Tougher environmental and consumer protection laws are also impacting the trend. By number of claims, automobile crash/collision is the most frequent cause of loss accounting for one claim in 10. The oil and gas sector is particularly impacted by fire: of the top 20 insured losses in the industry, fire and/or explosion was the main cause, accounting for eight of the losses – Refinery, Argentina ($800m), Refinery Complex, Canada ($500m), Ethylene Plant, US ($500m), Methanol plant, Oman ($252m), Refinery, UK ($210m), Fertilizer Plant, US ($200m) and Refinery, Saudi Arabia ($180m). © Copyright 2017 by Barker Phillips Jackson Insurance and Other Financial Services All Rights Reserved, Impact of COVID-19 on Property and Liability Insurance, Operating Your Business During the COVID-19 Pandemic, Most Business Policies Cover Riots, Vandalism and Civil Commotion, Faulty workmanship/maintenance: 6 percent. Although claims in economies like the U.S, have been decreasing following improved safety and product quality, severity continues to rise globally. Machinery Breakdown. Although the report focused on international trends, many of these observations are worth noting for their applicability to business in the U.S.: Claims frequency in the oil and gas sector has been relatively consistent lately. Poorly Priced Products. The sectors especially hit by machinery breakdown are energy, marine, property and engineering. The global airline industry recently experienced its safest year ever, yet the number of aviation claims shows no sign of abating. Professional indemnity claims are the major cause of losses in the financial lines insurance sector, according to the analyzed portfolio, accounting for 74% of claims by number and 72% by value. #1: Late paying customers/clients. The sectors especially hit by machinery breakdown are energy, marine, property and engineering. 10. The Congressional Budget Office estimates that, on average. Machinery breakdown is a large driver of commercial property claims in terms of the number generated. Florida contributes 55 percent of that; Texas, 13 percent; and Louisiana, 9 percent. The largest financial losses worldwide come from fires/explosions and aviation incidents, according to an analysis of the Top Causes of Loss of 470,000 Insurance Losses Around the World by Allianz Global Corporate & Specialty (AGCS) Insurance.