Insurance Operational Risk Loss Data Report 2020

  • 23 July 2020

Every year ORX produces a free report on our global insurance loss database. The report explores the frequency, severity and key trends in operational risk loss events across the insurance and reinsurance industry. We also publish a report summarising the data in our banking database. This year’s insurance report examines the last six years’ worth of data in our database – 2014 to 2019.

These reports are just one way in which we achieve our mission of supporting operational and non-financial risk management, providing vital information to professionals around the globe. We also share some of our research, data and resources publicly. Explore our free resources section to see what we have to offer. Or, find out what benefits ORX Membership could bring to your firm.

Download the report for free to read our analysis in detail, or read on for the highlights and top findings.

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Annual Insurance Loss Report 2020

Report highlights

Decrease in operational risk losses continues

In 2019, we collected a total of 1,104 operational risk loss events from our insurance members,  with a gross value of €493m. This means that 2019 had one of the lowest levels of severity in the six-year period – only 2016 showed a lower total loss. This is despite an increased number of insurance companies submitting losses to the global insurance loss database in the year.

Considering the increased ORX insurance membership, it is interesting to note that total operational risk loss and frequency have remained fairly stable. This indicates that gross loss and frequency per submitting insurance company has decreased. Indeed, between 2014 and 2019, gross loss per submitting member has decreased by 56 per cent from €58.5m to €25.9m, while event frequency per member has decreased by 39 per cent from 95 to 58.

ORX Insurance loss data report 2020 total gross loss and number of events per year

Non-life and Life business lines make up 81% of gross loss

As in last year's report, the non-life and life business lines make up the vast majority of insurance operational risk loss. In total, life and non-life account for 81% of the total gross loss in the global insurance database between 2014 and 2019. The average annual gross loss for life was €279m, while the average for non-life was €244m. For asset management, the average annual gross loss was €20m, with the largest gross loss being approximately €32m occurring in 2017.

Graphic showing breakdown of the life and non-life business lines in the ORX global insurance data 2014-2019

Western Europe and North America show largest proportion of gross loss

The global distribution of losses shows that the largest proportion of gross loss occurred in Western Europe and North America, reflecting the regions in which membership has been growing since the ORX insurance service started in 2015. Given the growth trajectory of the global insurance loss database, this distribution can be expected to evolve as more insurance companies join the ORX membership from other regions.

Global distribution of frequency and severity of losses reported between 2014 and 2019

Map showing the global distribution of frequency and severity of losses reported between 2014 and 2019

What will the impact of coronavirus be on op risk losses?

While the report shows that operational risk losses are down in 2019, what affect will coronavirus (Covid-19) have on losses in 2020 and beyond?

The coronavirus pandemic has changed the world as we know it. Financial institutions across the globe reacted swiftly and redefined their operations to ensure critical services continued. Business continuity plans were largely successful and operational risk functions have taken a much more active role than ever before in facilitating change and guiding firms through the crisis.

We've published two reports which explore the immediate impacts of the pandemic, both of which are freely available for you to download:

Coronavirus: the first lessons report
Covid Risk Review report

But, what will be the ongoing impacts be? Capturing the costs of the pandemic in a consistent way is a key issue facing the industry, with both direct and indirect operational risk impacts needing to be considered. Identifying and categorising indirect costs can be very difficult due to
wide-ranging impacts. We've worked closely with our members to produce and share guidance to support the operational risk industry in recording coronavirus-related losses.

By 2021, we will begin to have a clearer picture of how much the coronavirus crisis has cost the industry over the course of 2020, and we will be able to reflect this in next year's loss report. This will allow us to truly understand the full operational costs the industry has suffered. Until then, we must work together to manage the impacts of this crisis.

Access an extensive database of op risk losses with ORX Membership

This report gives you a glimpse of what's in the ORX global insurance loss database. With ORX Membership, you can access an extensive database of losses to run reports for analysis and trends in the data. You can then use this for benchmarking, to support good decision-making and to generate and validate scenarios.

Not only do you get access to data, but ORX Membership gives you the chance to be part of a global community managing operational risk together. Our members can take part in research studies, practice benchmarks, working groups and much more.

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Read the full analysis in the free report

Annual Insurance Loss Report 2020