Insured Tsunami Losses Now Estimated Under $4 Billion

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NU Online News Service, Jan. 31, 1:30 p.m. EST?Risk Management Solutions, a catastrophe-risk modeling firm inNewark, Calif., said overall insured losses from the Dec. 26, 2004Indian Ocean tsunamis will be below $4 billion.[@@]

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This first official estimate from RMS is significantly lowerthan a previous assessment earlier this month from theInternational Underwriting Association of London, which said afterquerying its member companies that total insured losses areexpected to range between $5 billion and $10 billion.

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While this is RMS' first official estimate, one companyexecutive, Laurie Johnson, vice president and head of catastropheresponse at RMS, had told National Underwriter earlier this monththat the company feels insured losses from the catastrophe thatkilled more than 200,000 people in a dozen countries are not likelyto exceed $5 billion.

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RMS said its latest estimate is based on the informationavailable within the first three weeks after the disaster. In areport issued to its clients today, RMS outlined the impact of theearthquake and subsequent tsunami across multiple insurancelines?including an estimate that insured property losses across allthe affected countries would range from $2.5-to-$3 billion.

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RMS said property claims constitute the majority of insuredlosses resulting from the disaster. Several forms of property havebeen affected, the CAT-modeling firm noted, including localhousing, motor vehicles, local fishing boats, yachts and cargoships in harbors, industrial plants, coastal tourist hotels, andresorts.

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Additionally, travel insurance claims are estimated to be around$100 million, RMS said. As many travel insurance policies includeextensive coverage for medical treatment, insurers could besignificantly affected by the high number of injured travelers, aswell as smaller claims for cancellations and lost belongings.

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On the life-health insurance side, the largest insured lossesare likely to arise from foreign tourists affected by the event,RMS also noted. Claims from local populations are expected to besmall, due to low insurance penetration. Life and health insurancecosts are estimated to be less than $1 billion.

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