Reinsurance broker Guy Carpenter has put out an early estimate for insurance and reinsurance market losses related to hull and cargo lines, as well as port facility damage, related to last week’s devastating explosion in the port area of Beirut, Lebanon.
The explosion destroyed much of the area around the port and docks, with numerous warehouses and buildings levelled and a number of marine vessels sunk by the explosion, which is assumed to have been caused by ammonium nitrate stored at the facility.
The Governor of Beirut had estimated the economic cost of the explosion to Lebanon as being in the range of US $10 billion to $15 billion and as we explained last week, the insurance and reinsurance market appears to be expecting a loss of somewhere above US $500 million.
As we said in that update, losses extend far beyond the port itself, with damage across a wide area to property and businesses in the city of Beirut.
But the centre of the explosion in the port area is perhaps the easiest to derive an estimate of losses from, given coverage by insurance is likely much clearer for these often larger assets.
Guy Carpenter analysed the port area and assets in and surrounding it, with a focus on the hull and cargo lines of business, as well as the damage to the port facilities themselves.
The reinsurance broker explained, “There is still much uncertainty and speculation on the quantum of the insured loss. Guy Carpenter does not yet have its own full estimate.
“The port is close to the centre of the city where retail and corporate real estate, as well as residential property, will have been affected. At the same time, property insurance levels remain relatively low in Lebanon, despite recent market penetration. The penetration for industrial exposures near the port and for commercial lines will be higher, which could impact some of the international insurance market.”
The company is expecting more building level damage assessment data early this week, which should help to hone the estimate and perhaps add in more commercial property from around the port.
But, for the immediate assessment, Guy Carpenter said its early analysis, “Suggests the total combined hull, cargo and port facility losses should be within USD 250 million.”
Our market sources continue to suggest a market loss of above $500 million is likely, with some sources edging closer to the billion dollar mark.
It may take some time before the final tally is understood and it is likely to be far overshadowed by the economic and human toll from this disaster.