5 February 2016 Insurance

Tianjin “biggest man-made loss” in Asia: IUMI

The explosions that took place in the Port of Tianjin, China, in 2015 caused the biggest man-made losses ever in Asia, according to the International Union of Marine Insurance (IUMI).

The company said that the severity of the blasts coupled with the large amount of insured goods on site contributed to estimated losses ranging between $5-6 billion, which around 50 percent are likely to fall under the marine umbrella.

Furthermore, the explosions resulted in the deaths of 173 people and caused injuries to 800 more. Large-scale damage was also experienced to surrounding property and infrastructure.

The disaster has presented a number of unprecedented challenges for claims assessment, according to IUMI. This includes an inability to access the affected area – limiting insurer and their adjusters. Clean-up operations have also eliminated the possibility of conducting a formal loss adjustment process within the exclusion zone, according to the firm.

Due to this, all insurer assets, including cars and containers within the exclusion zone, were either considered to be a total loss or the extent of the damage sustained was estimated based on forensic accounting.

“As claims were bring filed, it became clear that the majority of the losses would include the thousands of new motor vehicles being parked near the new site,” said Patrizia Kern-Ferrettum, chairman of the IUMI facts & figures committee.

“Traditionally, catastrophe modelling has focused on static risks, such as buildings and infrastructure, including those within ports.

“Catastrophe losses resulting from mobile risks such as ships have yet to be fully modelled. Proper cargo modelling must correctly account for geographic distribution and advanced methods are required to address complex logistics systems in real time,” she added.

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