The explosions at a chemical warehouse in Tianjin, one of the world's largest ports, won't deal a massive blow to China's insurance sector, even though insurers liable for damages after the blasts will have to fork out a large sum of money. But it will seriously disrupt the supply of imported cars and stoke price pressure.

The actual value of blast-damaged properties such as imported vehicles being warehoused at the port and buildings near the explosion site is estimated to be 5-10 billion yuan ($781 million to $1.56 billion).

However, even though coverage for property damage caused by the explosions is much larger than for life insurance and employer's liability insurance, the amount insurers will have to pay out is unlikely to extend beyond current estimates.

The insured losses are still being calculated. However, even if the results reach the upper end of the payment range, they would still be dwarfed by the premiums collected by the nation's property insurance companies.

In the first half of the year, premiums for property insurance totaled more than 420 billion yuan, according to statistics from the China Insurance Regulatory Commission.

Worries over heavy burdens to be borne by any individual company are also overblown, as the losses will be shared by a group of insurers.

Furthermore, normally only big insurers that draw in a substantial portion of the nation's property insurance premiums are eligible to sign contracts for providing protection against risks to properties in the major port cities of the nation. Fears that the incident might take a heavy toll on small and medium-sized insurers are thus unnecessary.

However, the explosion in the port, which warehoused an array of imported vehicles, will deal a heavy blow to foreign auto brands. According to media reports, around 40 percent of China's imported cars enter the Chinese market through Tianjin, and around 8,000 just-assembled cars - including Volkswagen, Hyundai, Renault and Toyota vehicles - were damaged.

Among the foreign brands, EU brands such as Volkswagen, Renault and Porsche will be hardest-hit because the port has halted transport of all containers that store dangerous items, according to media reports. And in the EU, cars are labeled as dangerous items. That means imports of EU cars will have to wait to pass through customs at Tianjin.

The impact will not be felt in the short term, because inventories of imported cars have been high in the past few months. But after the inventory is used up and imported cars are still awaiting customs clearance, there will be tighter supply. This will eventually push up prices as well.         

The article was based on interviews with Hao Yansu, dean of the Insurance College at the Central University of Finance and Economics, and Zeng Zhiling, a senior analyst at LMC Automotive. bizopinion@globaltimes.com.cn.