News Middle East22 Sep 2020

Lebanon:Questions raised on whether insurers can suspend paying port blast compensation

| 22 Sep 2020

Questions have been raised about insurers refusing to pay compensation for damages generated in the 4 August Beirut post explosion on the grounds that an official report has yet to be released stipulating the cause of the explosion.

Insurance companies have refused to pay any compensation before the release of the official report despite the fact that mere hours after the incident, the Insurance Control Commission asked insurance companies to deploy their experts to begin assessing the extent of damages and to start paying compensation even before the investigation report is issued, reported An-Anahar.

Insurers say that paying out on damages that are directly or indirectly caused by the Beirut Port explosion is conditional on the classification of the explosion and whether explosion is included in the list of events covered by the insurance policy.

An insurance industry source says that in principle, "insurance companies do not have the right to use the excuse that the official investigations have yet to be completed to refrain from paying compensation because the report issued by the official authorities does not constitute the only means of proof available to them".

Conversely, insurance companies have the right to rely on the non-issuance of an official report on the causes of the explosion to refrain from paying compensation if they prove that such a report constitutes the only means of proof available to them under the present circumstances and their inability to obtain other means of proof due to the referral of the investigation into the "crime of the Beirut Port explosion" to the Judicial Council.

Whatever, insurance claims lodged in respect of damages suffered from the massive explosion amounted to $2bn as of early September.


Talks between insurance companies and reinsurers over compensation to be paid for damages arising from the 4 August Beirut port explosion have been ongoing for weeks.

The Association of Insurance Companies in Lebanon has confirmed that it continues to communicate directly with international reinsurers with the aim of speeding up the compensation process, even before the official report on the cause and nature of the blast is issued. The total economic losses caused by the Beirut explosion has been estimated at up to $15bn.


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