China regulator urges finance firms to support Tianjin disaster relief

The two explosions in Tianjin last week could generate insurance losses of up to 1.5 billion U.S. dollars, Fitch Ratings said on Tuesday.

This insurance news extends beyond companies from the west, as Chinese insurers will also be affected.

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Chinese insurers throughout quite a few sectors – property, casualty and life – can be impacted by the blasts, Credit Suisse analysts wrote in a analysis observe.

It was too early to say how the credit strength of China’s insurance sector as a whole would be affected, it added.

China securities regulator on Monday urged financial institutions to support disaster relief efforts in the northeastern city of Tianjin, and said insurance companies would set up a 24-hour service to handle related claims.

A portion of claims from the blast likely will be reinsured both in local and international markets, Fitch said. 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 Reinsurance Group, which this month applied to carry out an initial public offering, is the country’s biggest reinsurer, but other top spots in the market are occupied by European players Swiss Re, Hannover Re, Munich Re and Scor.

Zurich Insurance and Allianz are among the foreign insurers who have received claims stemming from the blasts, which killed more than 100 people and destroyed or damaged thousands of cars at Tianjin, the world’s third largest port in terms of total cargo volume.

The insurance payouts could reach 6 billion yuan (US$938 million), according to initial estimates by the insurance industry. Until now, insurers hadn’t been making any guesses as to how large the insured losses may be.