Estimates of the economic losses caused by the 4 August blast in Beirut range between $3bn and $5bn, according to the governor of Beirut.
He also said that about 300,000 people were displaced in the Lebanese capital after the explosion, reported Al Eqtisadiah.
Separately, AM Best says that the likely effect on the local insurance market remains uncertain at this stage.
The massive warehouse explosion sent a devastating blast wave across Beirut, killing at least 100 people and injuring nearly 4,000, reported Reuters. Some people are missing. Officials said the toll is expected to rise.
The blast took place at port warehouses that stored highly explosive material. The explosion was the most powerful ever to rip through Beirut. Numerous buildings and vehicles suffered damage.
About 2,750 tonnes of ammonium nitrate were stored in the Beirut port warehouse that exploded, devastating large parts of the Lebanese capital, Prime Minister Hassan Diab said.
"It is unacceptable that a shipment of 2,750 tonnes of ammonium nitrate has been present for six years in a warehouse, without taking preventive measures," he said at a defence council meeting, a spokesman told a press conference.
The explosion aggravates to difficulties in Lebanon, which has been hit by the coronavirus pandemic and is suffering from its worst financial crisis in decades.
AM Best: Impact on insurance market
In comments on the port explosion, AM Best says that the cause of the blast is still under investigation. As the situation is unfolding, the likely effect on the local insurance market remains uncertain at this stage.
Insurance penetration rates in Lebanon generally are low and property insurance represents only a small fraction of the Lebanese insurance industry, which is dominated by three segments: life, medical and motor. Based on the latest available data, together these segments accounted for almost 85% of Lebanon’s gross written premium (GWP) in 2018.
However, property insurance has been a growing line – accounting for 6% of total GWP in 2018 – as insurers have leveraged their relationships with policyholders to offset weaker performing motor business by cross-selling more profitable products. Given the extent of the damage in one of the busiest, wealthiest areas of the country, AM Best recognises the incident will weigh on Lebanon’s already challenged insurance sector.
In a Best’s Market Segment Report titled, “Lebanese Insurance Market Faces Mounting Uncertainty” published in March 2020, AM Best noted that civil unrest and a ballooning public debt had increased the level of economic uncertainty, negatively impacting the credit quality of Lebanon’s insurance market.