Published on: 13/09/2020
The only obstacle to paying all the insurance claims resulting from the unfortunate 4 August blast at the Beirut port is that there has been no release yet of the report on the investigation into the explosion, that will show the reason behind the explosion, according to a senior insurance executive.
Mr Fateh Bekdache, chairman and CEO of Arope Insurance in Lebanon, told Arabian Business, “The Lebanese insurance sector, which is one of the few living private sectors in Lebanon, has been facing this devastating catastrophe at all levels. Open and intensive discussions are taking place with the authorities and reinsurers who made it clear from Day One that they need to be aware of the cause that triggered the explosion in order to act accordingly.”
Claims have been frozen until the government finishes investigating the blast. Insurers would largely be off the hook if it were a deliberate act.
If the investigation confirms that the explosion was an accident, and based on the number of insured damaged vehicles and properties, the estimate suggests that 30%. of the damages would have been covered by insurance. The main sector affected is residential, followed by commercial properties and motors.
“The total value of damages ranges between $5bn and $10bn, with only 30% insured by insurance companies, representing a claims volume of around $2bn, according to preliminary estimates,” Mr Bekdache said.
He stressed that the liability of each insurance company is variable "depending on its risk management strategy, the type of treaties and protection covers they have in place, in addition to the share of claims they have and the severity of the damages".
Mr Bekdache said he expects that the Lebanese insurance market will "weather the storm", as the market has always been a mature one. Nevertheless, whatever the final bill, some Lebanese insurers will struggle to pay it.
Arope, one of the 10 largest non-life insurers in Lebanon is owned by Blom, Lebanon’s second largest bank.
The blast on 4 August, caused by 2,750 tonnes of ammonium nitrate stored improperly for years at the port, devastated much of the city centre. More than 200 people are dead or missing, 6,500 wounded, and an estimated 300,000 are homeless.
Tags: ACAL, Insurance Companies, Lebanon, Reinsurance