The insurance and reinsurance industry losses from the explosions at the Chinese Port of Tianjin are expected to range from $1.6 billion to as much as $3.3 billion by broker Guy Carpenter, making the blasts one of Asia’s largest man-made loss events.
Guy Carpenter has published a report for its clients, looking at the initial loss estimates from the blasts and outlining the many variables involved in assessing the losses, which could have a bearing on the final insurance industry loss total.
The explosions in Tianjin already look certain to hit a number of reinsurance firms. The major reinsurers Munich Re and Swiss Re are expected to take a share of the loss, but it could trickle down to specialists, the Lloyd’s of London market and potentially to some insurance-linked securities (ILS) fund managers.
“The explosions that occurred in Tianjin, China are likely to constitute one of the largest insured man-made losses to date in Asia and will certainly be considered one of the most complex insurance and reinsurance losses in recent history,” James Nash, CEO of Asia Pacific Operations for Guy Carpenter, commented.
The two massive initial explosions that occurred at Tianjin Port on 12 August of this year created a fireball and shock wave that blasted shipping containers; incinerated vehicles in the port and on an adjacent highway overpass; destroyed warehouses, production facilities and dormitories; impacted the nearby Donghai Road Railway Station and blew out windows within residential structures for several kilometers, according to Guy Carpenter.
The brokers report discusses the complexity of the event from an insurance and reinsurance perspective and provides a preliminary estimate of insured losses from many classes of business, including: containers; cargo in containers; property; automobiles; and general aviation.
The higher the insurance and reinsurance industry loss estimates from the Tianjin blasts rises, the greater the likelihood of the loss spreading more widely among reinsurance markets and impacting some of the ILS funds which have reported potential exposures.
The broker has been analysing the site of the explosion using satellite imagery taken before and after the blasts. CAT-VIEW (Guy Carpenter’s satellite-based catastrophe evaluation service), enabled the broker and clients to use satellite imagery to understand what exposures were present at the time of the blast and therefore could contribute to the loss.