Explosion Insurance Losses Could Be $1.5B
The insured losses from a series of explosions at a chemical warehouse in Tianjin on 12 August are “likely to be material” for Chinese insurance companies, potentially exceeding $1 – 1.5 billion, said Fitch Ratings, as the “high insurance penetration rate in this area could make the blasts one of the most costly catastrophe claims for the Chinese insurance sector in the last few years.”
“Fitch believes that claims from the blasts are likely to undermine the financial performance of some regional players and those property and casualty insurers with high risk accumulation in the affected areas. That said, it is too early to determine the exact impact that this incident will have on the credit strength of the Chinese insurance sector as a whole,” Fitch said.
“Claims from the blasts could be shared with both local and international reinsurers, which could mitigate the direct impact on the Chinese insurance sector,” Fitch said, and as Bermuda is home to many re/insurance companies, the island’s re/insurers are likely to be among the re/insurers affected.
The blasts occurred at a warehouse on August 12, where more than 700 tons of highly toxic substances, mainly sodium cyanide, were being stored, CNN reported.
At least 114 people were killed as a result of the explosions, and 69 people are reported missing.
The explosions affected a huge swath of the city: 17,000 homes damaged, more than 170 companies affected and 3,000 cars destroyed.
Thousands of people whose homes were damaged by the explosions’ shock waves took shelter in nearby schools and apartment compounds in the days afterward.
