Many perform adequately under normal conditions, but their weaknesses may surface after a failure, when deterioration, outdated equipment and system dependencies complicate the investigation and recovery. For insurers and risk managers, the issue is not simply an asset’s age, but whether its existing condition could complicate repairs or replacement and prolong the disruption to business operations.

Ageing infrastructure creates a disconnect between older assets and today’s technology and operating demands, as facilities across industries continue to rely on decades-old electrical systems, utilities, boilers, refrigeration equipment, conveyors and structural components. A loss investigation should therefore look beyond the immediate failure. Inspection reports, maintenance records, repair recommendations and capital plans may show whether the mechanism developed gradually and whether known conditions affected the asset’s ability to withstand an upset or external event.

The challenge is rarely limited to replacing what was damaged. Original equipment may no longer be manufactured, spare parts may be unavailable, and current regulations may prevent rebuilding to the prior specification. A seemingly straightforward repair can become a modernisation project involving redesign, upgrades to adjacent systems and new approval requirements. That transition can increase both repair costs and the period of interruption.

The Champlain Towers South collapse illustrates why condition history is central to understanding a major loss. The 12-storey beachfront condominium in Surfside, Florida, partially collapsed on June 24, 2021, killing 98 people. The investigation describes long-term water intrusion, coastal exposure, corrosion, weakened concrete and structural connections with limited capacity due to original design and construction deficiencies. Significant concerns were documented and a major repair programme was being planned, but the structural work had not begun.

From a claims perspective, the gap between identifying deterioration and completing repairs matters. Inspection findings, owner decisions and planned work may affect causation, foreseeability and loss allocation. The collapse also shows how design limitations, environmental exposure, corrosion and delayed repairs can progressively weaken a structure and allow damage to spread.

From a claims perspective, the gap between identifying deterioration and completing repairs matters. Inspection findings, owner decisions and planned work may affect causation, foreseeability and loss allocation. The collapse also shows how design limitations, environmental exposure, corrosion and delayed repairs can progressively weaken a structure and allow damage to spread.

Initial repair timelines for large property losses often underestimate the time required to restore operations. Ageing infrastructure may require broader demolition, redesign, permitting, system upgrades, testing and commissioning because drawings are incomplete, designs are obsolete, parts are unavailable or new equipment will not fit the existing footprint.

Regulatory review, specialist engineering, long-lead equipment, approvals and temporary operating arrangements can further delay recovery. The key measure is the time needed to restore function, not simply replace the damaged item. The 2018 Morandi Bridge collapse illustrates the difference between replacing a damaged component and restoring the function it served. Completed in 1967, the bridge included structural elements that were difficult to inspect and maintain.

After a section collapsed on August 14, 2018, killing 43 people and severing a major route through Genoa, Italy, recovery required demolition of the remaining structure, public safety measures, design and approval of a replacement bridge, and citywide transportation coordination. The new bridge opened in 2020.

Restoring function may also require rebuilding to a different standard. Reconstruction is generally governed by the requirements in effect when the work is undertaken, not necessarily those that applied when the asset was built. Substantial damage to an older structure can trigger current building, fire protection, electrical, environmental, accessibility or seismic requirements, even when those upgrades extend beyond repairing the direct physical damage.

The claim analysis should distinguish direct damage, like-kind replacement, mandatory code upgrades, elective betterments and commercial improvements. Clear cost segregation and early agreement on scope help clarify the work required and support a more efficient rebuilding process.

Values for older assets are often based on historical cost, indexed estimates or like-for-like replacement assumptions. These approaches may not reflect what it would cost to replace outdated or specialised equipment today. The relevant measure is what it would cost, and how long it would take, to restore function. That may include:

• Redesign to changes in urban planning criteria
• Application of current engineering standards
• Use of different materials or technology
• Regulatory upgrades
• Specialist labour
• Testing
• Commissioning

Replacement complexity affects both property and business interruption values. A production line may appear adequately valued but require months of redesign, manufacture, installation, testing and integration. Business Interruption (BI) values should reflect lost income and continuing expenses during recovery, including the time needed to restore expected production levels. Declared property values, BI values and indemnity periods should be tested against the same loss scenario. Otherwise, a significant shortfall may remain hidden until a major loss occurs.

Even an accurate replacement value may not capture the full exposure when other operations depend on the damaged asset. One transformer, pipeline segment, substation, utility corridor, dock, process vessel or control system may support several production lines, customers, suppliers or locations. Its physical value can be modest compared with the revenue and supply chain activity that relies on it. Claim severity arises not only from what failed, but from everything that can no longer operate without it.

The 2019 Philadelphia Energy Solutions (PES) refinery fire and explosions began with failure of an 8-inch pipe elbow installed in the 1970s within the hydrofluoric acid alkylation unit. The event disrupted the facility, generated substantial interruption exposure and became intertwined with broader financial pressure on the insured. The refinery ceased operations shortly afterward and entered bankruptcy proceedings. PES shows how a small component within a critical system can produce consequences far beyond its repair cost.

Risk analysis should consider function, not value alone, by assessing critical dependencies, available redundancy and alternate capacity. After a loss, affected operations and overlapping coverage should be identified to evaluate interruption and accumulation.

For risk managers, ageing infrastructure calls for a broader view of exposure. Condition history, maintenance, prior repair recommendations, critical dependencies and available redundancy should be considered before a loss, along with whether declared values and restoration periods reflect the practical challenges of replacing older assets. Addressing these issues early can support capital planning, contingency arrangements and loss-prevention efforts.

For insurers, the same information can strengthen underwriting, risk engineering and claim planning. The Claims function completes the feedback loop by sharing what an actual loss reveals about causation, repair constraints, replacement cost, recovery time and interdependencies. Applying these lessons across the business can improve risk selection and assessment, guide practical recommendations, and help reduce the impact of similar losses in the future.