Reinsurance broker Guy Carpenter has estimated that the insured bill for combined hull, cargo and port facility losses from the recent Beirut explosion should be within $250 million.
Source: AP Photo/Hussein Malla
The estimate comes after the Governor of Beirut said that the economic impacts of the blast would be in the region of $10 billion to $15 billion.
Guy Carpenter acknowledged that there is still much uncertainty surrounding the incident but said it was expected to drive losses across multiple insurance lines.
For example, the port where the blast originated is close to the center of the city where retail and corporate real estate, as well as residential property, will have been affected.
At the same time, the broker noted that property insurance levels remain relatively low in Lebanon, despite recent market penetration.
But the penetration for industrial exposures near the port and for commercial lines will be higher, which could impact some of the international insurance market.
From a Marine perspective, Guy Carpenter’s vessel tracking capability found 40 vessels to be within a radius of 10 km of the blast.
Ten vessels were within 1.6 km of the explosion and are expected to have incurred damages, while many other vessels were within a radius where sporadic damage may have occurred.
The explosion is thought to have been caused by 2,750 metric tons of ammonium nitrate that was stored unsafely in a port warehouse since 2013.
The resulting blast was large enough to damage buildings several kilometers away and resulted in the deaths of at least 137 people, as well as more than 5,000 injuries.
Much of the port area has been totally destroyed, with a crater measuring 140 metres in diameter, partial collapse of the grain silos, total collapse of warehouses and ships overturned.
The socioeconomic consequences for Lebanon will be significant, Guy Carpenter noted, impacting a country that already faced economic and political challenges.
The broker added that it is likely to take some time for investigators to assess the explosive mechanism that caused the ammonium nitrate to ignite, and warned that the outcome would not be directly comparable to the idealised high explosive events that insurers use for blast modelling scenarios.
Guy Carpenter believes that useful comparisons can, however, be drawn with the 2015 Tianjin explosion in China, which involved a similarly large quantity of ammonium nitrate that was stored alongside a potential fuel source.
