Estimated losses from Thai floods keep rising

Email Print

12 December 2011

Insurance losses from the Thai floods could reach as high as $US20 billion ($19.66 billion), according to US insurance guru Bill Berkley.

His gloomy outlook on the disaster is higher than the latest assessment from Swiss Re, which says the total insurance losses in Thailand could hit $US11 billion ($10.81 billion).

Swiss Re has estimated that its own claim costs from the severe flooding will be around $US600 million ($589.93 million).

The floods have affected more than 13.4 million people in 64 of Thailand’s 77 provinces and put at least 1.92 million hectares of land under water.

More than 600 people have died in the floods which followed heavy monsoon rains and Thailand’s highest rainfall in 50 years.

Swiss Re Chief Underwriting Officer Brian Gray says the impact of the flood “is likely to be significant and could last some time”.

He says water levels remain high in some places, which is delaying the resumption of business and access to sites by loss adjusters.

“Estimates for property damage and business interruption claims will therefore remain subject to significant uncertainty for some time,” Mr Gray said.

Aon Benfield’s November update on catastrophes estimates more than 4 million claims could be made in Thailand, where the World Bank says economic losses could be as high as THB1.41 trillion ($45 billion).

The total is made up of THB661 billion ($21.09 billion) in property damage and THB689 billion ($22 billion) in lost productivity.

Thailand is a significant link in global supply chains and a popular location for Japanese factories. It is the second largest produce of hard disk drives for computers.

Mr Berkley told the Goldman Sachs Financial Services conference in New York that the global catastrophe business has been inadequately priced since Hurricane Katrina in 2005, when US reinsurers moved offshore.

“They paid for that in Chile,” he said. “They paid for that in New Zealand. They paid for that in Japan. They paid for that in China and now they’ve paid for that again in Thailand, where you’ll probably have $US20 billion in flood losses.

“It’s still not attractive to write [catastrophe risks], at least from our point of view. There’s lots of volatility, lots of risk, and we’re not interested.”