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roperty's biggest risk factors can significantly impact equipment repair costs. Insureds must connect these risks with valuations and work with a suitable partner to mitigate their potential effects.
The commercial property insurance market has experienced fluctuations in recent years. Although rates have stabilized in the second quarter of 2024, businesses still face single-digit increases. This highlights the need for organizations to monitor their property exposures, particularly regarding large equipment used in operations.
Equipment breakdowns can lead to property damage, business interruption, and additional repair or replacement expenses. This increases overall property risk costs as organizations must consider potential consequences when assessing their risk management strategies.
High-tech and specialized equipment makes unforeseen breakdowns a substantial risk. Even well-maintained equipment can experience malfunctions, causing significant financial losses.
"The changing nature of property risks, especially with high-tech equipment in distribution centers and electronic sorting equipment, is a significant factor contributing to an increase in insured property losses," said Michele Sansone, CUO Property, Americas, AXA XL.
The value of complex equipment continues to rise alongside repair costs due to expensive replacement parts and specialized diagnostic technicians. This, combined with the recent strain on property insurance, makes it essential for businesses to address this risk.
For those operating large machinery and other equipment requiring regular maintenance, it's crucial to anticipate potential breakdowns and disruptions. Businesses must have the right risk mitigation tools in place to minimize losses.
Two key factors impacting property rates are natural catastrophes and supply chain disruption. The increased frequency and severity of catastrophic events drive up pricing, while supply chain issues lead to extended business interruption periods due to delayed component deliveries.
Accurate valuations are essential for managing equipment breakdown costs. Businesses must understand the origin of their equipment, products, or stock to address potential risks. Inaccurate valuations can result in underinsurance, leaving businesses vulnerable to significant financial losses.
Partnering with insurance professionals ensures accurate values are reported and risk exposures are understood. Risk managers, brokers, account executives, and producers all play a role in helping insureds manage their risks.
Technology enables property owners to focus on protection by predicting and assessing damages more quickly and accurately. Data-sharing can build resiliency into the market, putting clients in a better position should an incident arise.
Effective risk management improves clients' overall risk profiles. AXA XL's team focuses on maintaining relationships with customers to best protect them. By building a team of over 400 risk engineers who work closely with underwriting, AXA XL provides accurate and detailed insights about each client's needs.
AXA XL's approach streamlines the claims process by engaging in bespoke underwriting and thoroughly assessing each risk. This comprehensive risk evaluation allows the team to anticipate and prepare for potential claims more effectively.
