When a fire tore through a small manufacturing unit in a recent case analyzed by Allianz Commercial, the physical damage was relatively contained. The business interruption loss that followed was not. It ran to nine figures across the wider corporate group. The fire was the trigger. The structure of the supply chain was the multiplier.
It is a pattern that runs through a new Allianz Commercial report covering 7,888 business interruption insurance industry claims with a total value of approximately €6.74 billion between January 2021 and December 2025. Claim severity is rising sharply even as claim frequency holds steady, with the average value increasing by more than 30% annually over the past two years. The average business interruption claim now exceeds €850,000, roughly 70% higher than the average associated property damage claim of close to €500,000. The gap between what it costs to repair the damage and what it costs to be unable to operate has widened into territory that most declared values were not set to cover.
Fire and explosion accounts for more than 40% of the total value of claims analyzed, approximately €2.9 billion, and was responsible for nine of the 10 costliest man-made business interruption events in the dataset. It is the leading cause of loss by value in the US, Germany, UK, Singapore, and Hong Kong. The sectors most affected include semiconductors, energy, metal processing, chemicals and defense, where concentrated production means that a single site fire can cascade into a much larger operational loss.
"Fire remains the leading driver of large business interruption losses we see," said Sarah Versavaud, chief claims officer and business interruption global practice group leader at Allianz Commercial. "The challenge is often not the fire itself, but the interruption of a critical activity on which the wider business depends."
Natural catastrophes are the second-costliest cause at 34% of total claim value and the most frequent at 26% of all claims. Together, fire and natural catastrophes account for around three-quarters of the total claim value in the dataset. Notably, non-natural catastrophe activity, including fires, water damage and machinery breakdown, accounts for 74% of claims by volume and 66% by value, a reminder that the perils generating the most headline coverage are not the ones generating the most claims.
Overall insured catastrophe losses exceeded $107 billion in 2025, the sixth consecutive year above the $100 billion mark, according to the Swiss Re Institute. That figure underscores the sustained pressure on the BI market from natural events alone.
The size of a business interruption loss is increasingly determined by factors well outside the original incident. Many industries continue to depend on a small number of specialist production sites, suppliers or geographies for critical materials and components. When disruption strikes one of those nodes, whether through fire, cyberattack or extreme weather, the impact can cascade quickly and expensively through global operations.
The semiconductor sector illustrates the dynamic. Strong demand, rising prices, and constrained alternative capacity mean that even a relatively brief disruption can translate into an outsized business interruption loss. The two costliest non-natural catastrophe events in Allianz Commercial's five-year dataset both involved fires at semiconductor factories.
Lean inventory strategies have compounded the problem. Organizations that stripped back stock to maximize capital efficiency effectively reduced their margin to absorb disruption. "The focus on just-in-time and lean supply chains has reduced buffers and resilience, so when you have a disruption, it's immediate and it's expensive," said Alberto Barani, business interruption group leader, risk consulting at Allianz Commercial.
Recovery timelines are also extending. In some industries, it is not the repair itself but the time required to replace specialist equipment, restore production capacity, meet regulatory requirements, and requalify products that drives the ultimate cost. Many business interruption claims from Hurricane Helene, which struck southeastern US states in September 2024, remain unresolved more than two years later, not because of coverage disputes but because the underlying businesses have taken that long to recover.
Tariffs are adding a further layer, particularly in sectors dependent on imported raw materials and equipment, where higher import costs can inflate mitigation expenses even when the original loss event is unchanged.
The combination of rising claim severity, longer recovery timelines, and inflation has put declared values and maximum indemnity periods under direct strain. A business that set its values before the post-pandemic inflationary spike, before tariff-related cost increases in its supply chain, or before a shift toward more concentrated sourcing may find that its coverage no longer reflects what an actual recovery would cost or how long it would take.
The report raises underinsurance as an explicit risk, noting that where values are not reviewed regularly, inflation alone may be enough to leave a company short. Maximum indemnity periods, the fixed window after which BI claim payments stop, are among the most frequently underestimated elements of a business interruption policy.
Versavaud pointed to a related risk. "Inflation affects business interruption losses on several levels," she said. "Beyond increasing repair, recovery and mitigation costs, it is also reflected in higher insured values, increasing overall business interruption exposures. Conversely, where values are not reviewed regularly, inflation may contribute to underinsurance."
Higher import costs are already flowing through into property and business interruption claims, extending both the cost and the duration of recovery in ways that standard indemnity periods may not accommodate.
The Allianz data points to declared values and indemnity period length as questions that belong at every renewal conversation, rather than as static program features set once and left. The companies best placed to navigate a disruption, the report concludes, are those that invest in resilience before a loss occurs, through fire protection, supply chain diversification, business continuity planning and cyber preparedness.
"Even relatively modest investments can significantly reduce the impact of disruption when it occurs," Barani said.
