The insured loss due to the explosion in Beirut, Lebanon, will be affected by several insurance lines and is a reminder of the risks of hazardous materials in the supply chain, say marine experts.
The tragedy will also give impetus to rate increases in an already hardening marine market, say several sources.
Although it is too early to know how much the loss will ultimately cost insurance companies, marinas, real estate, business interruptions, contingent business interruptions, hospitality and personal insurance lines will all be affected, they say.
More than 2,700 tonnes of ammonium nitrate stored in a warehouse in the port of Beirut were reported as the probable cause of the massive explosion last Tuesday that left more than 1
The Lebanese government suspended on Monday after the explosion.
So far, Hannover Re, Munich Re and Liberty Mutual have reported that they expect to see c
Given the significant uncertainty in their estimate, reinsurance broker Guy Carpenter & Co. LLC the total insurance losses for hull, cargo and ports to within $ 250 million in a report Friday.
Ryan O & # 39; Conner, New York-based North American regional manager for offshore vehicles at Allianz Global Corporate & Specialty, a unit of Allianz SE, said the insurer expects "limited effect" based on its initial investigations of its portfolio and accounts.
The loss could have an "excessive impact on price tightening" due to insurers' concerns about port exposures around the world and in the United States, O & # 39; Conner said.
The marine market has experienced "huge losses" in the last five years due to many different natural disasters and other events, says Brad Eldridge, vice president of Falvey Cargo Underwriting, part of Falvey Insurance Group, based in North Kingstown, Rhode Iceland.
For marine cargo operations, this event will "add it to an already hardened market and extend it depending on the final number. Prices will increase," said Mr. Eldridge.
Much of the port was completely destroyed, grain silos partially collapsed, warehouses completely collapsed and ships were turned upside down, Guy Carpenter said in his report.
Damage to the urban area next to the port has also been serious, says the reinsurance broker. can happen in the port, and insurance companies should be aware that port risk and cargo collection are still a "major factor," said Lars Gustafson, New York-based CEO of Arthur J. Gallagher & Co.'s marine practice.
Tianjin- the port's explosion in 2015, which resulted in a loss of $ 4 billion, was a "true awakening" For the industry that got insurance companies to take part in "a larger margin for these catastrophic events, Said Gustafson.
Tianjin triggered a lot of changes and focused on insurance companies in a different way to guarantee insurance, he said, adding that he did not expect the Beirut loss to be as large.
This is not just a shipping or shipping problem, says Andrew Kinsey, New York-based senior risk consultant, Navy for Allianz.
The incident is "a reminder that it is a matter of the supply chain. All stakeholders must be involved in this," said Captain Kinsey.
Declared and incorrectly stored dangerous goods are a root cause of fires, he said.
In the case of abandoned ships, and "now with additional pressure in a COVID-19 environment, we will see more of this," said Captain Kinsey.
He cited the example of the FSO Safer, an abandoned floating storage vessel moored in the Red Sea off Yemen that is coated with more than a million barrels of crude oil that the United Nations has said is at risk of bursting or exploding.
During revenue talks with the second quarter last week, Hannover Re said it would likely be a "big loss" from the event, while Munich Re also said it expected large receivables.
Liberty Mutual said it would see a loss in the range of $ 25 million to $ 50 million, based on initial indications, but that this estimate could change.