NU Online News Service, Dec. 6, 12:31 p.m. EST
Insurance industry representatives say the four months of flooding in Thailand could cost the insurance industry as much as $11 billion, with Swiss Re putting its losses at over a half-billion dollars.
Swiss Re issued an estimate today saying claims losses from flooding in Thailand would cost it $600 million. It put total insured market loss in the range of $8 to $11 billion.
Aon Benfield, a subsidiary of Chicago-based insurance broker Aon Corp., also issued a report today saying industry losses could exceed $10 billion while total economic losses could come in at around $45 billion.
Swiss Re, based in Zurich, Switzerland, says the intense rainfall over the last few months killed hundreds and flooded approximately 1,500 industry facilities.
Flooding remains in outlying areas of Bangkok. This makes it “difficult to assess losses accurately,” Swiss Re says, and makes the figures subject to change.
Swiss Re’s loss estimate is net of retrocession and before tax.
Since July 2011, Thailand has experienced very strong monsoon rains, exacerbated by the remnants of three typhoons: Nok-Ten, Nesat and Nalgae, Swiss Re points out.
Rains fell from July through October in northern and central Thailand, bringing the highest rainfall in 50 years, Swiss Re notes.
“In addition to the human cost, the impact of this flood on the Thai economy and the companies that operate there is likely to be significant and could last some time,” says Brian Gray, Swiss Re’s chief underwriting officer in a statement. “The floods have forced the closure of several major industrial estates. For weeks, factories were under several meters of water and have been unable to produce and supply key parts to global carmakers or digital and electrical goods manufacturers.”
Factories belonging to and supplying Japanese companies were primarily affected and, to a lesser extent, Western based international companies were also impacted, says Swiss Re. The nation is the world’s second largest producer of hard-disk drives for computers.
Swiss Re says Thailand’s Office of Insurance Commission puts total insured exposure in its industrial area at $20 billion for industrial and large commercial risks. Only about one percent of homeowners and small businesses in the country have flood insurance.
The remaining high water levels in some areas are also keeping claims adjusters from getting into some insured’s sites to evaluate claims, says Swiss Re. The company cautions that because of this situation “significant uncertainty” remains concerning the loss estimates.