Insured Loss Info Vague In Wake Of Killer Waves

By Mark E. Ruquet

NU Online News Service, Dec. 29, 4:03 p.m. EST?Information coming out of the Pacific Rim is sporadic as brokers are finding it difficult to communicate with policyholders in the wake of the killer tsunami that has claimed more than 77,000 lives and counting.[@@]

"The human toll is much greater than anything people have ever considered," said Brian Ehrhart, president of Aon Re Services, a subsidiary of Chicago-based broker Aon, Inc. "There is a huge human impact here that is stunning and significant. The insurance impact will be relatively small compared to the human impact. It's too early to comment on what [the insurance impact] will actually be, because I don't think reports of specific property damage have come in."

In a statement from Lloyd's of London, the insurance market said it is monitoring the developing situation in Asia and expected its exposure to be limited to resorts, personal accidents, travel insurance and marine risks.

Lloyd's said communication is limited and there is little information coming out of the affected areas, making it impossible for now to determine the extent of their exposure.

The Lloyd's statement went on to say that the market would make more information available as it comes in over the coming days and weeks.

What would most likely be affected by the catastrophe, on a global scale, would be large corporate-owned vacation properties, noted Mr. Ehrhart, largely affecting property and facultative insurance markets.

Any dollar figures mentioned in light of the calamity is purely speculative, he said, adding the it could be as long as six months before some of the worst-hit, less-developed countries can report loss figures.

The tsunami was caused by a magnitude 9.0 earthquake off the West coast of Sumatra in the Indian Ocean early Sunday morning.

Benfield ReMetrics, a subsidiary of London-based broker Benfield Group, issued a report on the disaster. In it, they said earthquake and/or tsunami coverage is not offered as a standard component of property insurance in the affected markets, which include Thailand, India, Indonesia, Malaysia, Sri Lanka and Maldives.

In Thailand, Benfield said it predicted that much of the expected losses would come from the resort areas of Phuket affecting beachfront hotels, with business interruption to be a major contributor toward claims. The firm also noted that the Thai insurance market has never experienced a catastrophic event of this magnitude.

The Insurance Information Institute put out a report, citing figures supplied by Swiss Re's Sigma division. Total non-life premium volume in 2003 for India, Indonesia, Malaysia and Thailand came to $9.3 billion, with most of it--$3.7 billion--from India and $1.7 billion relating to Thailand. The primary risk bearers are largely domestic and some Japanese insurers.

Mr. Ehrhart said there will probably be many insurance adjusting issues coming out of this event that have never been considered in these regions before, such as replacement costs, complete loss and re-building.

"Will they be allowed to re-build in these areas? Will it be considered safe or will they have to recede into the hillside?" Mr. Ehrhart speculated. "There are a lot of issues out there. We just don't know."

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Insured Loss Info Vague In Wake Of Killer Waves

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