Insured Tsunami Losses Now Estimated Under $4 Billion

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

This first official estimate from RMS is significantly lower than a previous assessment earlier this month from the International Underwriting Association of London, which said after querying its member companies that total insured losses are expected to range between $5 billion and $10 billion.

While this is RMS' first official estimate, one company executive, Laurie Johnson, vice president and head of catastrophe response at RMS, had told National Underwriter earlier this month that the company feels insured losses from the catastrophe that killed more than 200,000 people in a dozen countries are not likely to exceed $5 billion.

RMS said its latest estimate is based on the information available within the first three weeks after the disaster. In a report issued to its clients today, RMS outlined the impact of the earthquake and subsequent tsunami across multiple insurance lines?including an estimate that insured property losses across all the affected countries would range from $2.5-to-$3 billion.

RMS said property claims constitute the majority of insured losses resulting from the disaster. Several forms of property have been affected, the CAT-modeling firm noted, including local housing, motor vehicles, local fishing boats, yachts and cargo ships in harbors, industrial plants, coastal tourist hotels, and resorts.

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

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

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Insured Tsunami Losses Now Estimated Under $4 Billion

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