By Lauren Dodillet
A series of blasts in Tianjin on August 12th may cue billions of dollars in insurance claims. The explosions rocked the world’s third-largest port last Wednesday and burned into the weekend, the result of currently unknown circumstances surrounding hazardous materials found at a storage facility.
Financial planner Credit Suisse Group estimates that the insurance payouts may reach as high as $1 billion to $1.5 billion. Foreign firms like Switzerland’s Zurich Insurance Group Ltd and Germany’s Allianz SE are already receiving claims. Credit Suisse says Chinese insurers will be affected the most, as well as international companies that insure multinationals or provide reinsurance coverage.
China’s largest insurance firms, including Ping An and China Pacific, have already reported hundreds of property, car, and employer liability claims, and casualty and life insurers will feel the effects of the damage to property and the hundreds of people dead and injured by the accident.
In the past, accidents such as the one in Tianjin have taken their financial toll. In 1995 an earthquake caused such immense infrastructural damage on Kobe, Japan that the port city was closed for two years and suffered $40 billion in damage. In 2012 Superstorm Sandy struck New York and New Jersey and caused $650 million in damage to vehicles alone.
However, it is still too early to say for sure what the sum of the damage may be in Tianjin, in part because of the nature of the port city. “In ports, we have a massive concentration of high value (goods) which makes it hard for insurers to make exact risk assessments,” Dieter Berg, an expert at the world’s largest reinsurer, Munich Re told Reuters.