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How much do insurers pay on claims for lost or damaged inventory for manufacturers each year?
Hello! Thanks for your question about how much insurers pay each year on claims for lost or damaged inventory for manufacturers, focused on goods lost or damaged while in transit. The short answer is that insurers in the U.S. pay over $3 billion per year on these claims. You'll find a deep dive of my research below.
METHODOLOGY
To respond to your request, I searched through corporate websites, government databases, trusted media sites, and industry reports to find the requested information. I first looked to see if the figures you're looking for were readily available from an existing source. Unfortunately, I couldn't find one conclusive figure on the amount paid by insurers for lost/damaged goods. Therefore, I looked for data that would allow me to triangulate an estimate for this number. I was able to find data on the total value of goods shipped in the U.S. each year, and an industry benchmark for the percent of that value that would be claimed as lost/damaged each year. Using those figures, I was able to triangulate my estimate. You'll find the details of this in the next section.
INSIGHTS
Overall, the global financial impact of cargo loss exceeds $50 billion annually. For example, ocean carriers lose about 10,000 containers at sea each year. In 2012, insurers paid $800 million in claims relating to lost/damaged goods on freight ships.
To determine the value paid by insurers on claims for lost and damaged inventory in transit, I first looked for the total value of freight shipped each year in the U.S. In 2016, the following value of goods were shipped using these transport methods:
The next step was to determine was percent of that freight would be lost or damaged and ultimately claimed for insurance. The best method I found for doing this was to look at industry benchmarks. Cornerstone, a transportation solution company, ships over 110,000 loads per year. The company had 354 claims for loss/damage in 2016, with a total value of $909,219, with the average claim payment of $2,568. Cornerstone's claims ratio is 0.32% of shipments.
If we use these figures as a benchmark, we can take a leap and assume that the claims ratio of 0.32% is normal and at least roughly applicable industry-wide. Based on this and the total freight values above, we can figure the insurance payout for claims in the industry:
That's a total value of $3,089.2 million.
You also mentioned in your request that you'd like a list of key players (insurers) in the industry spending the most in each of the key sectors (electronics, aviation, medical, pharma, industrial equipment, etc.). However, given the depth of research required to triangulate the figures above, doing additional research to identify key players in the industry, as well as breaking them down by segment, is outside of the scope of a single Wonder request. That being said, we'd be more than happy to perform the additional research if you'd like to submit it as a follow-up question.
CONCLUSION
To wrap up, insurance companies in the U.S. spend over $3 billion annually on claims for goods lost or damaged in transit. I hope this information is helpful to you! Thanks for using Wonder, and let us know if we can help you with anything else.