Estimates for the eventual insurance and reinsurance market loss from the devastating explosion that struck the city of Beirut, Lebanon in August are seemingly on the rise, as the President of the local insurance association has said he expects economic losses will reach $7.5 billion.
It’s more than double his earlier estimate, as Elie Tarabay, the President of the Association of Insurance Companies in Lebanon (ACAL), had previously explained that the insurance market loss would likely run into the low single-digit billions of U.S. dollars.
Update: It’s now become clear that the $7.5bn figure has been wrongly reported in the Lebanese press as an insured loss number and should actually be considered the latest economic loss estimate. Insured loss estimates continue to range around the US $1 billion to $1.5 billion mark, we understand.
Just after the explosion, Tarabay had said that he expected the economic cost from the blast would be between $5 billion and $10 billion, with an expectation that the insurance and global reinsurance industry would pick up roughly 30% of that figure.
Now, at a webinar held on September 30th by the General Arab Insurance Federation, of which Tarabay is Vice President, he explained that the ultimate industry loss may be closer to US $7.5 billion.
It’s far above where most global reinsurance markets have been pegging the claims bill, with international insurance estimates seemingly ranging below US $3 billion for the bill.
If the loss has actually doubled, as the ramifications of the explosion became clearer, damage was assessed and insurance claims filed, it does mean that international reinsurance markets will likely need to raise their estimates of losses from the blast.
It’s possible there may be more clarity of the eventual industry impact once third-quarter earnings season begins, as the analysts are certain to be asking insurance and reinsurance firms for greater clarity of their estimates for losses from the Beirut blast.
Some questions also remain unanswered over qualification for insurance and the cause of the blast, with the potential for some claims to be denied depending on the outcome of investigations.
A Lebanese government minister had also previously said that insurance claims filed from the explosion reached US $425 million by mid-August and that this was likely only a quarter of the total at most.