Tianjin blast to strain Chinese insurers

Insurance companies that will receive claims related to the deadly twin blasts that rocked the northern port city of Tianjin should immediately process the claim and provide support, the China Insurance Regulatory Commission (CIRC) announced.

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

More than 8,000 new vehicles are reported to have been destroyed by the blasts, which caused a fire that affected a large area of the port, and at least 50 people are believed to have died. As such, should insured losses come in at the high end of the initial US$1bn-$1.5bn estimate, they would represent about 88% of total direct premiums written in Tianjin or roughly 5.4% of aggregated shareholder capital for the six most active issuers at end-2014.

“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”.

PICC has the largest share of the property and casualty insurance market in Tianjin.

Insurers, including Allianz and Zurich, said yesterday that they had received claims for payouts from businesses that had been damaged, but that it was too early to put a total on the final costs.

“Container losses are likely to be spread among many marine cargo insurers but motor vehicle insurance is a specialist sector and so that market is likely to be hit hard”, said Nick Derrick, chairman of the IUMI’s cargo committee.

The insurance watchdog also ordered insurers to be ready with enough funding to immediately release insurance claims.

Insurance companies have been in a slide since the August 12 event.