Insurers have been warned the cost of the explosions in the Port of Tianjin may reach USD3.3 billion.
Reinsurance broker Guy Carpenter has issued its report on the explosions at the port on 12 August that left 158 people dead and 800 injured and said its estimate for the cost of the damage and losses will be between USD1.6 billion and USD3.3 billion.
The figure is significantly higher than the initial estimates in the days after the explosions, which put the potential figure at USD1.2 billion.
The fireball and shockwave from the explosions 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 kilometres.
With Chinese authorities restricting access to the blast site over fears of the toxic chemicals stored in the warehouse at the centre of the explosions, Guy Carpenter have used satellite images to assess the damage.
The company’s head of Asia-Pacific Operations, James Nash, says the scale of the damage will be exacerbated by the complexity that insurers face in dealing with the claims.
“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,” he said.
Rating firm AM Best has said the property losses will make up the majority of the insurance claims but the marine market will also suffer sizable losses.
A spokesman for the firm said, “Property damage claims will form the major part of overall insured loss, which includes property and content losses at and near the blast site, arising from mostly commercial property policies, as well as thousands of new motor vehicles parked near the site, which were damaged by fire or explosion.
“Business interruption loss forms a large part of the uncertainty surrounding the ultimate loss for the insurance industry in this incident. On the marine cargo side, it will take time for claims arising from damaged shipping containers to be reported and inspected by insurance companies. Besides property, motor, and marine cargo losses, to a lesser extent some liability, personal accident and life claims will arise from the incident.”