Toulouse Explosion Losses May Total $840 Million

AGF, the French insurance arm of Germany’s Allianz, announced that it expected total loss exposure from the explosion last Friday of a chemical factory in the Southwestern city of Toulouse to be between € 610 and € 910 million ($563 and $840 million).

The company, as the lead insurer of the factory owned by petroleum giant TotalFinaElf, expects its own exposure to be in the $7 million range. Its primary exposure of around $422 million will be offset by its reinsurance coverage, the company indicated.

The explosion, which totally destroyed about four square blocks, killed at least 30 people (more than 40 are still reported missing) and hospitalized over 800, many of them with critical injuries, has raised calls for relocating potentially dangerous industrial facilities away from populated areas. Many adjacent buildings, including the municipal soccer stadium have been rendered uninhabitable.

Investigators have all but ruled out a possible terrorist attack, and have concluded that the explosion was in all probability an accident, possibly caused by improper storage of ammonium nitrate fertilizer, the plant’s principal product.

French insurers have warned that premium increases in double digits are inevitable. The industry is still suffering from the $7 billion losses caused by 1999’s windstorms and faces over $900 million in losses from the recent disasters in the U.S.

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