Analysts have said that the impact on both the local insurance markets and global reinsurance markets remains uncertain at this point, although it will surely be a significant loss event.
Credit rating agency AM Best noted that insurance penetration rates in Lebanon are low, with property insurance representing only a small fraction of the industry. However, property is a growing line, and given the extent of the damage in one of the busiest and wealthiest areas of the country, the incident will likely weigh heavily on the already-challenged sector, the rating agency added.
Sven Althoff, Member of the Executive Board responsible for P&C reinsurance at Hannover Re, also recognised that the Beirut explosion would constitute a ‘major loss’ for the company.
“Given that it’s a harbour, industrial-related area, we have to assume that there is a good level of penetration here. So, from that point of view, I guess you will see this on our major loss list in the third quarter.”
However, Althoff added that it was ‘very early days’ and warned that it remains ‘too early to say’ what the insurance penetration in the affected areas is.
“That it will be a major loss for us, I see as pretty certain,” he said. “But whether it’s a low double-digit or high double-digit or even three-digit number, it would be impossible for me to comment right now.”
The World Bank Group has said it will assess Lebanon’s damage and needs and will work to help mobilise public and private financing for reconstruction and recovery. The Group added that it is: “Willing to reprogram existing resources and explore additional financing to support rebuilding lives and livelihoods of people impacted by this disaster.”
Lebanon’s Economy Minister Raoul Nehme said the country would have to rely at least partly on foreign aid to rebuild.