Thailand flooding costs Lloyd’s of London $2.2 billion – Total cost estimated at $15-$20 billion
By Juliette Garside, www.guardian.co.uk
14 February 2012 Lloyd’s of London has estimated that it is liable for $2.22bn (£1.4bn) of net claims from the flooding that devastated Thailand last year. In a first calculation of its liability for the damage, released to the City on Tuesday, the insurance market said the claims were unlikely to require members to make “material claims” on its central fund or reduce the overall level of capitalisation of the market. Combined estimates from other insurance groups, including Swiss Re and Munich Re, have already put the total cost of the Thai floods at $15bn to $20bn. Lloyd’s has used market share analysis, a review of contracts in place and estimates from each of its syndicates to work out its share of the damage. In a statement, Lloyds said assessing claims after a major flood takes longer because the “sheer scale of the event” would leave loss adjusters thinly stretched on the ground. The knock-on impact of the interruption to business could also give rise to claims emerging some time after the event. Flooding began in July and subsided only in December. […] Thailand’s heaviest flooding in 50 years ravaged farms and automotive and electronics plants, and is thought to have claimed 800 lives. More than 10,000 factories were forced to close and lay off more than 350,000 workers while production was suspended. In December, the semiconductor group Intel warned that the floods had hit supplies of hard drives, wiping about £1bn off revenues. The set-top box maker Pace was also forced to issue a series of profit warnings, which ultimately led to the departure of its chief executive after hard disk drive supplies were hit. This week Japan reported that its economy shrank 2.3% in the fourth quarter partly due to the flooding that disrupted production at leading manufacturers such as Sony and Honda. […] The Thai floods were one of a series of major natural disasters in 2011. In the first four months of the year, earthquakes in Japan and New Zealand and flooding in Australia prompted claims from Lloyd’s totalling $3.8bn. The insurance industry overall is thought to have lost more than $50bn during the first four months of 2011, including the cost of tornadoes that swept across the US in April. Lloyd’s estimated that the Japanese earthquake and tsunami led to claims of $1.95bn, while the New Zealand earthquake cost $1.2bn and the Australian floods delivered a $650m hit. Total catastrophe claims for the year reached $108bn, making it the industry’s second-costliest natural disaster year on record, according to reinsurer Swiss Re.
