China explosions to cost insurers $1.5bn

While the full impact remains to be seen, initial insurance claims could reach $1.5 billion, according to an estimate by Credit Suisse.

The high insurance penetration rate in this area could make the blasts one of the most costly catastrophe claims for the Chinese insurance sector in the last few years.

Fitch believes that claims from the blasts are likely to undermine the financial performance of some regional players and those property and casualty insurers with high risk accumulation in the affected areas.

Xinhua News Agency quoted Liu Qi, general secretary of the association, as saying that online sales is emerging as a key engine to drive the growth of China’s insurance sector. If the insured losses came in at the high end of Fitch’s estimate, they would represent about 88 per cent of total direct premiums written in Tianjin.

China’s insurance companies have already received hundreds of property, vehicle and employer liability claims, including Ping An, China Pacific and China Life.

In a statement posted on its website, the CIRC urged insurers to prioritize the processing of Tianjin-related insurance claims and be open 24 hours to provide support to the families of those who perished in the tragedy.

Property and casualty insurers in the Tianjin region typically pass on about 10-15 percent of risks to local and worldwide reinsurers, Fitch said.

Tianjin, the world’s third largest port by cargo volume, was hit last Wednesday by the blasts in a large industrial zone, and more than 100 people were killed.