Allianz and Zurich among insurers affected, but both firms told StrategicRISK that they are not the lead insurers on the event as has been widely reported
The explosions that killed 114 people and injured more than 700 others in the Chinese port city of Tianjin earlier this month will cost insurers an estimated $1bn - $1.5bn, according to Credit Suisse and Fitch Ratings.
Insurers, including Allianz and Zurich, told StrategicRISK that they had already begun receiving compensation claims following the event.
But both denied they were the lead insurers on the event as has been widely reported.
A Zurich spokesperson said the group had received some claims notifications but it was “too early” to make any statements on its net impact.
Allianz said it expected to “receive a limited number of claims” from the incident.
“Based on the available information, we do not anticipate major financial claims to arise from this incident, but we continue to assess the situation,” a spokesperson said.
Local Chinese insurers are also affected, but a large portion of the losses are expected to be covered by reinsurance.
Most claims are expected to come from motor, cargo, liability, and property insurance, according to Fitch Ratings. Tianjin residents are also covered by a government-supported accident insurance plan in which each injured individual can get between $3,100 and $5,500, with about $7,800 being paid for each death.
Assessing the damage
Chinese state media has reported that 8,000 cars worth an estimated Rmb4bn ($625m) were destroyed in the blasts, including 2,700 made by Germany’s Volkswagen and 1,500 by France’s Renault.
Hyundai Motor of South Korea said 4,000 cars parked near the area were damaged while Japan’s Mitsubishi Motors put the potential damage at about 600 vehicles. About 40% of cars imported to China pass through Tianjin.
Investigations into the cause of the blasts are ongoing, but Chinese media said that at least one member of staff from Tianjin Dongjiang Port Ruihai International Logistics, which owns the warehouse, had been arrested.
The two explosions, which originated in a warehouse containing dangerous sodium cyanide, were said to have generated power equivalent to 3 and 21 tonnes of TNT.
Tianjin is one of China’s largest cities, with a population of 11.5 million, and is the third largest industrial and transport hub in the world.
The cost of explosions
According to Allianz Global Corporate & Specialty, fire and explosion is the second top cause of loss for businesses by total value, based on analysis of more than 11,000 large business insurance claims (each in excess of €100,000) between 2009 and 2013.
Fire was also the primary cause of four of the top 10 major reported non-natural catastrophe-related insurance losses last year, the insurer said.
According to the Allianz Risk Barometer, fire/explosion is the major cause of business interruption companies fear most (43%), closely followed by the impact from natural catastrophes (41%), with the impact of the subsequent disruption from the fire to operations often outweighing that of the damage itself.