LONDON--(BUSINESS WIRE/AETOSWire)-- AM Best is monitoring the situation in Beirut, Lebanon, following the devastating explosion at the city’sport on Tuesday, 4 August.
The cause of the explosion, which resulted in many casualties and considerable damage is still under investigation. As the situation is unfolding, the likely effect on the local insurance market remains uncertain at this stage.
Insurance penetration rates in Lebanon generally are low and property insurance represents only a small fraction of the Lebanese insurance industry, which is dominated by three segments: life, medical and motor. Basedon the latest available data, together these segments accounted for almost 85%of Lebanon’s gross written premium (GWP) in 2018.
However, property insurance has been a growing line – accounting for 6% of total GWP in 2018 – as insurers have leveraged their relationships with policyholders to offset weaker performing motor business by cross-selling more profitable products. Given the extent of the damage in one of the busiest,wealthiest areas of the country, AM Best recognizes the incident will weigh on Lebanon's already challenged insurance sector.
In a Best’s Market Segment Report titled,“Lebanese Insurance Market Faces Mounting Uncertainty” published in March 2020, AM Best noted that civil unrest and a ballooning public debt had increased the level of economic uncertainty, negatively impacting the credit quality of Lebanon’s insurance market.
Am Best maintains close contact with the companies it rates in Lebanon,continually assessing how they are navigating their increasingly difficult operating environment. To access the full copy of the Lebanon Market Segment Report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=295194.
For the international market, marine and property lines of business are expected to be impacted. Some observers are drawing comparisons with the 2015 explosion in the Chinese port of Tianjin, which highlighted accumulation exposures in ports for international insurers and re insurers, and caused extensive losses for major global carriers.
Am Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.For more information, visit www.ambest.com.
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