Lebanon: Fears arise over possible lapses in reinsurance cover
Source: Middle East Insurance Review | Dec 2020
Several insurance companies have failed to properly reinsure with the outside world, a lapse which puts at risk about $700m of the value of damage caused by the Beirut Port explosion, sources in the Insurance Control Commission have revealed to Arabian Business.
Fears have arisen that the insured would encounter default by some insurers that did not pay the reinsurers what the latter are owed.
The owners of damaged homes and stores are still waiting for insurance companies to pay compensation; while insurers, in turn, are awaiting the release of the official report on the cause of the explosion before paying out.
The Association of Insurance Companies in Lebanon (ACAL) said the full impact of the explosion on the insurance sector and on reinsurers will depend on the results of the investigation about the cause of the blast, which will determine if the blast was an act of war, a terrorist attack or an accident. It noted that in case of an accident, then most of the fire, property, marine and all risk policies will cover the insured losses.
ACAL estimated that the insured losses from the explosion could reach up to $1.5bn, mostly from the complete or partial damage to about 10,000 properties and 5,000 cars. It pointed out that about 90% of the insured losses are reinsured with ‘A’-rated reinsurers, and that Lebanese insurers are negotiating with reinsurers about the settlement of claims, even in the absence of a final official report about the cause of the explosion. Some insurers have started to settle small claims, such as on car damage, while larger claims will need more time to be settled. M