Larger losses loom from Thai floods

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30 January 2012

Insurance losses from flooding in Thailand could reach $US20 billion ($18.8 billion), although a final figure won’t be known until all business interruption policies are processed.

Swiss Re has placed insured losses at between $US8 billion ($7.5 billion) and $US11 billion ($10.3 billion), while reinsurance broker Aon Benfield has predicted $US10 billion ($9.4 billion) in insurance claims.

Some industry figures are even predicting economic losses from the Thailand floods could exceed the Tohoku Earthquake in March.

Flooding destroyed and damaged homes and industry across 64 of Thailand’s 77 provinces, including 10% of the country’s rice farms, according to Aon Benfield.

Thailand is also a production base for the world’s largest electronics and automotive groups including Sony, NEC, Toshiba, Nissan and Toyota. Hundreds of industrial parks have been inundated by floodwaters. Many plants remain closed, while companies such as Nikon have considered moving production to Vietnam.

The floods have reportedly impacted supply of up to 25% of the world’s computer hard drive components.

Reinsurance brokers Guy Carpenter say about $US3.3 billion ($3.1 billion) in insurance claims have been lodged so far, although the impact of contingent business interruption losses is still being assessed.

Willis Re says cargo losses are potentially large, but still uncertain.

Munich Re has estimated €500 million ($620 million) in claims, while Zurich will pay around $US250 million ($234 million) and Everest Re $US145 million ($136 million) in losses attributed to the floods.

The Thai Finance Ministry says local economic losses could exceed $US6 billion ($5.6 billion).

Marsh said insurers and reinsurers operating in the region have reacted by raising property rates by up to 30%.