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Insurance bill from Tianjin blasts may pass $2 billion

Insured losses from two huge explosions in the Chinese port city of Tianjin are likely to exceed about $US1.5 billion ($2.03 billion), Fitch Ratings says.

The blasts at a chemical warehouse may prompt the country’s most costly catastrophe claims, according to the agency.

The explosions on August 12 – killing 114 people and injuring more than 700 – were in an area where insurance penetration is high.

Reported insurance claims are expected to surge in the next few weeks.

The China Insurance Regulatory Commission says non-life premium from Tianjin totalled $US1.7 billion ($2.31 billion) last year, so insured losses may represent about 88% of premium written by the city’s six most active issuers last year.

Early reports from Lloyd’s Agency Network say more than 10,000 vehicles were destroyed in the blasts, which officials are still investigating.

The Chinese units of European insurers Allianz and Zurich have received claims for unspecified damage in property, motor and marine.

Both insurers are assessing potential losses.

Car manufacturers including Volkswagen and Toyota are also assessing damage, while French motor group Renault says nearly 1500 of its imported cars were burned in a warehouse.

The International Union of Marine Insurance (IUMI) says losses for damaged vehicles alone could hit $US300 million ($408.13 million).

Nick Derrick, chairman of IUMI’s cargo committee, says container losses are likely to be spread among many marine cargo insurers, but motor vehicle insurance will be hit hard.

IUMI says the growth of such large-scale risk is driven by the trend for bigger container ships and construction of large freight-handling and storage facilities.

Mr Derrick says man-made losses are hard to model, which makes premium calculation difficult. “This extremely sad and regrettable incident demonstrates the persistent growth of accumulation of values in port and storage areas, particularly in highly industrialised regions.”

Fitch says the Chinese general insurers most active in the region include People’s Insurance Company of China, Ping An, China Pacific, China Continent, Sunshine and Taiping.