Insured losses estimated at $3B for Beirut port disaster

Early estimates project insured losses to total around $3 billion from the Beirut port disaster on Aug. 4, according to insurance sources cited by Reuters.

The explosion, which officials have blamed on highly explosive ammonium nitrate stored at the port, killed 154 people and leveled areas of the capital city. The blast was so powerful that it could be heard in Cyprus across the Mediterranean Sea.

Insurance professionals are drawing comparisons between the Beirut port blast and the 2015 Tianjin warehouse explosion, which killed 116 and caused between $2.5 and $3.5 billion in insured losses, said Reuters.

The Association of Insurance Companies in Lebanon (ACAL) project the total economic cost of the catastrophe could be between $5 billion and $10 billion, with about 30% of the damage covered by insurance.

Chris Wylie, regional managing director for the Middle East at Charles Taylor Adjusting, told S&P Global Market Intelligence that the Beirut event likely will trigger claims in property and business interruption, as well as marine hull, machinery, and cargo. Other lines, including political violence, trade credit, and contingent/supply chain business interruption, also may be impacted.

In an Aug. 7 bulletin, reinsurance broker Guy Carpenter & Co. said its analysis suggests the total combined hull, cargo, and port facility losses should be within $250 million.

Outrage spreads

Protests erupted across Lebanon in the days after the Beirut blast, demanding answers over the government’s role in the deadly calamity.

“It’s like an apocalypse,” Yassine Jaber, a Lebanese lawmaker, told Bloomberg. “Pure negligence, and that’s the ultimate manifestation of how bad governance has been in Lebanon, with no accountability whatsoever, a manifestation of failure that should jolt us to wake up.”

On Monday (Aug. 10), Lebanese Prime Minister Hassan Diab and his cabinet resigned amidst the civil unrest.

However, the resignations could lead to more political instability if the Lebanese government continually fails to deliver on protestors’ demands.

“We need to move forward with the reforms, structural reforms, not just normal reforms,” said Jaber to Bloomberg TV. “There has been resistance in the political scene for implementing these reforms. I think from here onwards, if this resistance persists, I think the country cannot delay doing these reforms anymore, and a total collapse is on the cards.”

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