In a long interview granted to our colleague Al Bayan, Gabriel BEJJANI, non-executive Chairman of Nasco Re Holding, specialist of the Lebanese insurance market [4], gave an assessment of the tragedy caused by the explosion of the port of Beirut on 4 August 2020.
Atlas Magazine revisits this interview by summing up the statements made by G. BEJJANI, which were grouped by the editorial staff into four main points:
- The position of Lebanese insurers
In a Lebanon facing an economic depression, and despite the populist pressure that tends to blame insurers for their slowness to respond to policyholders' demands, local insurance companies have lived up to this historic challenge by first paying premiums to reinsurers in "transferable" dollars while clients were paying these same premiums in "confiscated" dollars. Reinsurance coverage wouldn't have been possible without this financial effort by the insurers.
- Causes of the explosion
Accident, act of war or undetermined cause, the origin of the explosion remains a mystery. For political, security and bureaucratic reasons, the investigation initiated by the authorities has been repeatedly put on hold. Only the official determination of the cause of the explosion by the authorities could lead to a quick resolution of the case. This would have spared some Lebanese cedants, their reinsurers and retrocessionaires financial and legal difficulties.
- Damage assessment
The economic crisis that Lebanon is going through not only prevents the insured from carrying out repairs but also obstructs the work of the adjusters who are facing great difficulties in estimating the damages. As compensation is based on paid invoices, insurance companies find themselves unable to settle claims.
Besides, this meticulous work itself is further complicated by the intervention of external advisors who tend to overestimate the claim amount by including, for example, undue operating losses.
- Claims settlement
In fact, the insurance industry's delay in settling claims is explained by the complexity of the file, which is exacerbated by the current Lebanese context. It is worth noting that NASCO RE, one of the traditional brokers in the market, had set an initial target of settling 90% of its commitments before 4 August 2022.
Unfortunately, the tough negotiations between policyholders and adjusters have allowed the company to reach only 75% of this objective which amounts to a total loss of 250 million USD net of retrocession from regional reinsurers. As a reminder, the overall claim amount for the whole market is currently estimated at 1.3 billion USD.