Insurance companies have so far paid six percent of the total value of insured losses resulting from the Port Explosion. They are still awaiting the official results of the investigation about the causes of the blast which devastated Beirut more than seven months ago. Estimates of the insured losses vary. They total $1.1 billion, according to the Blast Monitoring Report of the Insurance Control Commission (ICC), released at the end of February 2021. Insurance firms had reinsured 94 percent of these risks mostly to international companies which gives some hope to the insured to get compensations in fresh dollars that help them recover their real losses. Meanwhile international claim management and loss adjustment companies are entering the local market. These firms target insured with large claims, especially during catastrophes.
Estimates and vested interest
Estimates of the insured losses vary depending on who is doing the assessment. While the ICC report, which is based on data submitted by the insurance firms, has set property and casualty losses at $1 billion, Fusco Group Partners (WorldClaim) a US-based claims management and insurance, Chief Operating Officer of WorldClaim said the damaged buildings include residential and commercial buildings such as hotels, hospitals, warehouses, in addition to port installations. He said that their estimate is based on a radius of ten kilometers from the explosion epicenter not just the area near the port. According to , Chairman of the Association of Insurance Companies (ACAL), loss assessors working on behalf of the insured prefer to overestimate the losses in order to lure customers. The insured would not be interested in their services unless the net compensation they get after paying the fees to loss assessors is larger than the compensation they get without their intermediation, he said. Foreign loss assessors also have to recover the additional expenses they pay to do their job in Lebanon, Torbey said. According to Fusco, in the case of big disasters, insurance firms usually undervalue the losses because of lack of experience and misconceptions about the magnitudes of the catastrophe. Torbey said that the huge difference between the estimation made by foreign loss assessors working for the insured and that of loss adjusters working for insurance and reinsurance companies will create conflicts and will lead to litigation. “Courts in their turn will appoint their own adjusters to assess the losses and so we will have three groups of adjusters and this will create confusion and delay the compensation process,” he said. WorldClaim estimates losses from business interruption at more than $5 billion. According to Fusco, a number of insurance firms refuse to admit the impact of the explosion on business interruption claiming it resulted from the Covid-19 lockdowns. Torbey said: “To the best of my knowledge, few companies are insured against interruption of business.”
