The eventual insurance and reinsurance market loss from last week’s devastating explosion in the port area of Beirut, Lebanon is seen as around 30% of an estimated $5 billion to $10 billion economic cost, by the country’s insurance association.
Speaking to local media, Elie Tarabay, the President of the Association of Insurance Companies in Lebanon (ACAL) explained that the insurance market loss would likely run into the low single-digit billions of U.S. dollars.
That’s higher than where market sources have been focusing so far, as the international markets seemed to be viewing the event as somewhere north of US $500 million, but ultimately not too much higher than US $1 billion at its worst.
Insurance penetration is relatively low in Lebanon and while there is expected to be some high-value losses around the Beirut port area itself, the impacts more widely to residential property and businesses that have been affected was not assumed to be so high.
But Tarabay of the ACAL said in an interview with the Al-Roeya newspaper that he expects the main component of the insurance and perhaps reinsurance market loss to be from property and automotive lines of business, while the marine related losses in the port area are thought to be around US $200 million.
That closely aligns with reinsurance broker Guy Carpenter’s estimate that marine hull, cargo and port facility losses would not rise above $250 million.
The Association believes that around 30% of the total economic damages will be covered by insurance, with the economic costs estimated in a range from US $5 billion to $10 billion.
That would give an insurance industry loss range of US $1.5 billion to $3 billion, which seems reasonable if indeed property and auto end up being relatively significant.
Insurance and reinsurance companies will need to wait for an investigation into the explosion at Beirut port to be completed, to identify where coverage will be available or not.
“It’s too early to talk about the total cost of losses caused by the explosion until the authorities complete their investigation into the real causes of the explosion.
“If for example, the insurance policy excludes accidents resulting from bombs, chemicals, dangerous materials or act of war or act of terrorism, the companies will not cover the cost of material damages,” Tarabay told The Daily Star.
Whether the port had coverage for flammable or explosive materials under its insurance policy could also be a factor, Tarabay said, as companies could decline coverage if flammable materials were not included in the policy.
He also warned that even householders may not qualify for coverage if the explosion was caused by a dangerous material or act of war.
So it seems difficult at this stage to estimate the insurance and reinsurance market losses from the blast, given so much uncertainty over its cause remains.
Beirut explosion insured loss seen ~30% of $5bn – $10bn: Association was published by: www.Artemis.bm
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Original Article Posted at : https://www.artemis.bm/news/beirut-explosion-insured-loss-seen-30-of-5bn-10bn-association/