The London cargo market is facing losses of up to $40mn stemming from last month’s riots in South Africa, after arsonists razed a chemicals warehouse owned by Indian manufacturer UPL, Insurance Insider understands.
QBE is the lead insurer on the $40mn London market placement, which sources said was expected to result in a total loss, owing to the scale of the damage. The policy is brokered by Aon.
Major civil unrest broke out across South Africa last month following the jailing of former president Jacob Zuma, after he failed to attend an inquiry into corruption charges.
The rioting and looting led to multiple fires being set off in the Cornubia district on the outskirts of Durban, where the UPL warehouse is situated, storing a variety of products including fungicides and herbicides.
Security at the state-of-the-art warehouse was overwhelmed by rioters on 12 July, and a fire was set off, causing a large toxic smoke cloud to escape into the atmosphere, as well as a major chemical spill into the nearby Ohlanga River.
UPL was forced to warn local residents that exposure to the fumes may result in eye and respiratory irritation.
The London market is already expecting large claims activity to result from the spell of civil unrest, with early indications that political violence underwriters could be faced with a claims bill of up to $1bn, mainly stemming from reinsurance arrangements with state-owned insurer Sasria.
Sasria has recently estimated that the final claims bill from the spell of rioting last month will reach 19bn-20bn rand ($1.27bn-$1.33bn).
The insurer said it had registered over 95% of all claims related to the incident of civil unrest, during which the country descended into violence and turmoil.
Meanwhile, there has been an easing-off of rating pressure in the cargo market this year thanks to the entrance of new capacity, following several years of material correction.
A number of containership accidents in early 2021 have resulted in claims for the sector, as well as a fire at a Japanese electrical goods warehouse, which could end up costing the London market up to $70mn via Japanese treaties.
QBE and Aon declined to comment. UPL did not respond to a request for comment.
