The explosion at Beirut’s port will blow a hole in insurers’ balance-sheets

A HOMEOWNER IN Achrafieh does not care if the investigation is a sham, only that it rules that the explosion was an accident. Otherwise his insurance policy will pay nothing. The owner of a ruined boutique down the hill in Mar Mikhael would prefer the opposite result: her policy covers terrorism, unlike most, and will compensate her for an estimated $100,000 in repairs and lost inventory. The manager of a car-rental firm wonders if his explosion cover will include one of the largest non-nuclear explosions in history, since his vehicles were flattened by falling debris, not the blast itself.

The explosion that ripped through Beirut on August 4th, caused by 2,750 tonnes of ammonium nitrate stored improperly for years at the port, devastated much of the city centre. More than 200 people are dead or missing, thousands wounded, and an estimated 300,000 are homeless. The damage to property could reach $15bn. A chunk of that will land on insurance companies in Lebanon, with consequences for banks and foreign reinsurers.

In 2018 Lebanese insurers paid out around $90m to settle property and casualty claims. Insured losses at the port alone could now run to $250m. Victims have filed 2,500 claims for $425m in damages across the city, according to Raoul Nehme, the caretaker economy minister. Insurers expect the number of claims to...