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Just over a month after the explosion in the port of Beirut, it is still difficult to estimate an overall balance of damage. According to official sources, the explosion killed more than 200 people and injured more than 6 thousand, and due to its destructive force more than 300 thousand Lebanese were left homeless. Among the various problems now facing the country is that of insurance reimbursements for those who had a property damage policy. Investigations will have to determine whether it was an accident or not, and how much and how policyholders will be reimbursed will depend on this. In any case, experts estimate that banks and insurance companies will have great difficulties in compensating citizens.
Lebanese Economy Minister Raoul Nehme said that so far holders of home and business insurance policies have submitted 2,500 compensation claims, seeking reimbursement for damages suffered for a total sum of around 360 million euros. euros. . By way of comparison, in 2018, Lebanese insurance companies had reimbursed the equivalent of around 76 million euros to life and non-life policyholders in total.
According toEconomist, the Lebanese government expects a total of at least 10,000 requests for reimbursement to arrive and that the total amount of damages claimed will be around 2.65 billion euros. A figure that is close to double the annual revenue of the 52 insurance companies in Lebanon combined, which in 2018 had raised around € 1.45 billion in total gross premiums.
Local authorities have estimated that the explosion caused approximately € 12.7 billion in damage, but many of the damaged properties would not be covered by insurance and it is unclear if and how the government will intervene. In any case, the requests of the insured will not be considered until the investigation into the explosion of August 4 is concluded.
– Read also: What is known about the explosion in Lebanon
The crux of the matter is understanding how the explosion will be classified: if the investigation revealed that it was caused by a deliberate gesture – and at the moment there would be no evidence to support this thesis – the event could be considered a terrorist act. and most policies would not cover these types of events.
If, as seems more likely, the detonation of the 2,750 tonnes of ammonium nitrate stored in a dangerous way and never discarded were classified as a fortuitous event – and therefore an accident – banks and insurance companies would find themselves in greater difficulty: The insurance companies could try to claim against the owners of the tanks where the ammonium nitrate was stored in a dangerous way, but in any case they must reimburse the citizens, explained theEconomist.
– Read also: The economic crisis in Lebanon
Since the economic situation in Lebanon was already particularly critical, this is an additional problem for banks and insurance companies, which have had more than a few problems in recent times in guaranteeing reimbursements to policyholders. In 2019, insurance premium collections by insurance companies fell 4 percent because many citizens were no longer able to pay their policy premiums, and in 2020 collections by insurance companies continued to decline. In addition, several insurance companies are controlled by some banks in the country that, due to the crisis that Lebanon was already going through, are already in a situation of insolvency or in any case with enormous difficulties.
– Read also: Videos of the explosion in Beirut
There is also an additional problem for those who have to receive reimbursement from an insurance company, which is that most reimbursements for damages are paid in US dollars. In fact, the Lebanese pound is very weak, and although most Lebanese receive their wages in local currency, tuition, insurance premiums, or real estate loans have been priced in dollars since the early 1990s. The economic crisis was deepening, the government imposed restrictions on foreign exchange withdrawals last fall, and there is still a shortage of foreign exchange today. As a result, for some time now, insurance companies have been proposing to reimburse policyholders with cashier’s checks that can be deposited into their checking account and then exchanged for local currency. The value of the checks at the time of change, however, is reduced to a third, further discouraging those who wait for a refund after the explosion in Beirut.
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