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FOR IMMEDIATE RELEASE
HONG KONG - AUGUST 24, 2015 10:01 AM (EDT)
The massive explosion at a toxic chemical warehouse in the port at Tianjin, about 200 kilometers from Beijing, China on Aug. 12, 2015, has caught worldwide attention. To date, over one hundred people died in the incident with the death toll likely to rise further.
The Best's Briefing, titled, "Tianjin Losses Still Being Calculated; Risk Management Tools Come Into Play," notes that various market sources have started to come up with insured loss estimates, but those estimates are subject to uncertainty as residents within three kilometers of the blast site have been evacuated. Direct insurers and their policyholders are still not allowed to inspect on-site the extent of loss damage.
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.
Not only local insurers and reinsurers in China are impacted by the incident, but some regional insurers and reinsurers may also incur losses from this incident through inward reinsurance treaties and facultative placements.
This massive Tianjin warehouse explosion is just less than two years since the SK Hynix's semiconductor factory fire disaster in September 2013, which caused over USD 1 billion insured losses (total loss is USD 900 million). Both direct and reinsurance premium rates will be hardened, and reinsurers will likely tighten their terms and conditions for large commercial risks.
For the full copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=240772 .
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.