Swiss Re estimates claims costs of USD 600 million, net of retrocession and before tax but cautiously adds that estimates remain subject to significant uncertainty due to complexity of loss assessment
Swiss Re estimates its claims costs from severe flooding in Thailand at USD 600 million, after intense rainfall caused hundreds of deaths and flooded approximately 1500 industrial facilities. The estimate is net of retrocession and before tax. Water levels remain high in some areas, making it difficult to assess losses accurately. Estimates therefore remain subject to significant uncertainty.
Since July 2011, Thailand has experienced very strong monsoon rainfalls, exacerbated by the remnants of three typhoons – Nok-Ten, Nesat and Nalgae. From July to October 2011, northern and central Thailand experienced their highest rainfall in 50 years. More than 600 people have died and many more have lost their homes in the flooding. Millions of tons of food crops have been destroyed.
“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 Swiss Re’s Chief Underwriting Officer Brian Gray.
“The floods have forced the closure of several major industrial estates. For weeks, factories were under several metres of water and have been unable to produce and supply key parts to global carmakers or digital and electrical goods manufacturers.”
The industrial facilities affected consist mainly of factories belonging to and supplying Japanese companies – and to a lesser extent Western-based international companies. Thailand is a significant link in the global manufacturing industry supply chain and is the world’s second-largest producer of hard disk drives for computers. Total insured exposure in these industrial estates is estimated by the Thai Office of Insurance Commission at USD 20 billion.
Only about one percent of homeowners and small businesses in Thailand buy flood insurance. Flood losses for most industrial and large commercial risks are covered by all-risk insurance.
Swiss Re currently estimates the total insured market loss to be in the range of USD 8 to 11 billion.
Water levels are now receding but remain high in some areas of Thailand, delaying resumption of operations and slowing access to the sites by claims adjusters. Estimates for property damage and business interruption claims will therefore remain subject to significant uncertainty for some time.
The Swiss Re Group is a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer. Dealing direct and working through brokers, its global client base consists of insurance companies, mid-to-large-sized corporations and public sector clients. From standard products to tailor-made coverage across all lines of business, Swiss Re deploys its capital strength, expertise and innovation power to enable the risk taking upon which enterprise and progress in society depend. Founded in Zurich, Switzerland, in 1863, Swiss Re serves clients through a network of 56 offices globally and is rated “AA-” by Standard & Poor’s, “A1” by Moody’s and “A” by A.M. Best. Shares in the Swiss Re Group holding company, Swiss Re Ltd, are listed on the SIX Swiss Exchange and trade under the symbol SREN.