The intensification of the conflict between Hezbollah and Israel has significant repercussions on the Lebanese economy, particularly on the transport and insurance sector. Lebanon, heavily dependent on imports for its essential needs, finds itself directly affected, in particular through an increase in freight insurance rates.
Due to the war between Hezbollah and Israel, cargo insurance premiums have surged, putting additional pressure on Lebanese trade and, therefore, consumers.
Indeed, armed conflicts considerably increase the risks associated with maritime and land transport. Ships and cargo may be targeted or suffer collateral damage from hostilities. Carriers also often have to change their routes, causing costly delays.
Marine and cargo insurance companies, in response to these high risks, have classified the Lebanese-Israeli area as a high-risk territory, which results in an increase in insurance premiums.
Lebanon imports a large portion of its essential goods, including food, fuel, medicine, construction materials and raw materials. Rising insurance costs are reflected directly in the final prices of goods, worsening inflation.
Lebanese companies, already weakened by an economic crisis that has lasted since 2019, must absorb these costs or pass them on to consumers, which reduces competitiveness.
The president of the Association of Insurance Companies, Assaad Mirza, explains to Ici Beirut that war risk insurance has increased by around 2 to 2.5%, specifying that this is a defined rate daily by reinsurers, depending on the situation and the goods. On the other hand, the prices for all-risk insurance have not changed. He further points out that transportation costs have increased.
The president of the supermarket owners' union, Nabil Fahed, agrees, specifying however that the share of the cost of insurance is low, not exceeding 2% of the final price of the product. He admits that “even if insurance rates have increased, this increase has not yet been passed on to the consumer”.
As for fuel, the president of the fuel importers' union, Maroun Chammas, points out to Ici Beirut that insurance premiums have increased significantly in his sector, by around $8 per tonne imported. It also indicates that it is holding discussions with the Ministry of Energy to adjust the sale price accordingly.
Regarding health, the president of the union of pharmaceutical importers, Joe Ghorayeb, assures that even if insurance prices have increased, the prices of medicines have not changed, because this increase is absorbed by importers and distributors. He specifies that this increase, supported by importers, reached 15 to 20% in October.
The same goes for manufacturers. The increase in the cost of insurance for the import of raw materials is absorbed by companies, the ratio being too low compared to the cost price to justify an impact on prices.
As long as the conflict between Hezbollah and Israel persists, cargo insurance costs are unlikely to decrease. On the other hand, an intensification of hostilities could worsen the situation and lead to increased costs.
