The explosions at the Port of Tianjin, China are set to become one of the largest insured manmade losses in Asia to-date with potential losses of up to $3.3 billion, according to a new report by Guy Carpenter.
The event, which blasted shipping containers, incinerated vehicles in the port and on an adjacent highway overpass, destroyed warehouses, production facilities and dormitories, and impacted a nearby railway station and residential structures, will also be considered one of the most complex insurance and reinsurance losses in recent history.
Many classes of insurance were impacted by the loss, including: containers; cargo in containers; property; auto; and general aviation.
While access to the site is limited, Guy Carpenter said its satellite-based catastrophe evaluation service known as CAT-VIEW was able to utilize high resolution pre- and post-event satellite imagery to understand what exposures were present at the time of the blast and therefore could contribute to the loss.
The findings come as a new study published by Lloyd’s says that manmade risks are having an increasingly significant impact on economic output at risk (GDP).
In its analysis, Lloyd’s City Risk Index finds a total of $4.6 trillion of projected GDP is at risk from 18 manmade and natural disasters in 301 major cities around the world–out of a total projected GDP between 2015 and 2025 of $373 trillion.
However, manmade threats such as market crash, power outages and nuclear accidents are associated with almost half the total GDP at risk.
A market crash is the greatest economic vulnerability–representing nearly one quarter ($1.05 trillion) of all cities’ potential losses, Lloyd’s says.
New and emerging threats such as cyber attack, human pandemic, plant epidemic and solar storm are also having a growing impact, representing more than one fifth of total GDP at risk, Lloyd’s reports.
Governments, businesses and insurers must work together to ensure that this exposure–and the potential for losses–is reduced, according to Lloyd’s CEO Inga Beale.
Lloyd’s research shows that a 1 percent rise in insurance penetration translates into a 13 percent reduction in uninsured losses–a 22 percent reduction in taxpayers’ contribution following a disaster.
Insurance also improves the sustainability of an economy and leads to greater rates of growth. A 1 percent rise in insurance penetration leads to increased investment equivalent to 2 percent of national GDP, Lloyd’s notes.
Check out the I.I.I. publication A Firm Foundation: How Insurance Supports the Economy.