The huge Carmel fire and the severe damage it caused will likely cause little damage to Israel's insurance companies. Nonetheless, most of the companies will be affected. Initial estimates are that insurance claims will be in the tens of millions of shekels at least, and that they could reach hundreds of millions.
It is premature to estimate the damages, because the scale of the damage is as yet unknown. Early this afternoon, insurance companies had not yet sent assessors to all the areas affected that they insure, and while the fire still burns, assessors cannot reach all the areas concerned, so that it is too early to obtain precise information about the extent of damage.
The insurance industry and the insurance regulator were of one mind during the day that the damage known so far does not represent a threat to the stability of the insurance companies, which will have no difficulty meeting the payments due, whether from the point of view of their capital, or from the point of view of reinsurance. "From an insurance point of view, this is not such a great disaster," a senior insurance industry source said. He estimated that all the companies would meet demands for compensation comfortably, and said that a regular fire at a large factory would result in the same order of insurance damage, which in this case would be divided among most of the insurance companies. Another senior industry source said, "This is what we are here for - our hour has come."
Anyone who claims from private insurance will not be able to make a claim from the state for the same damage, although they may be able to claim for other, uninsured damage, such as inability to reach their home, or damage to infrastructures.
There are four main insurance aspects to the fire on the Carmel: damage to property, mainly private homes and their contents, which will be spread over all the companies in the market without any substantial effect on any one of them; damage to large assured entities, such as the Carmel Forest Spa Resort, which as far is known has been hit much less than was feared at the weekend, or Kibbutz Beit Oren; insurance for the bus in which the prison service cadets who perished in the fire were riding; and life insurance for the cadets and other fatal casualties.
The state will deal with people who suffered damage in the fire and were not covered by insurance. The terms on which compensation will be paid are not clear, and will become so only over time, in accordance with decisions by the government and officials.
Published by Globes [online], Israel business news - www.globes-online.com - on December 5, 2010
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