IUA says tsunami insured losses could reach US$10 billion

London-based International Underwriting Association (IUA) says insured losses stemming from the December 26 Indian Ocean tsunami could be between US$5-$10 billion.
The IUA asked member insurers for best estimates of potential losses from the event the IUA includes many London operations of major global insurers and reinsurers which affected a dozen nations on three continents. Hardest hit were Indonesia, Sumatra, Sri Lanka, Thailand, Malaysia, India and The Maldives, but the tsunami’s reach extended all the way to Africa as well. The death toll from the tidal waves, which resulted from a seaquake below the Indian Ocean, already exceeds 150,000, but is expected to rise considerably as tens of thousands of people still remain missing. Five Canadians are confirmed dead, but dozens more are missing.
“The enormity of the human tragedy is difficult to comprehend and our thoughts are with the victims of this catastrophe,” says Marie-Louise Rossi, chief executive of the IUA. “The economic cost will also be significant, but it is unlikely that many of these losses will be insured.”
Nonetheless, Rossi says local insurance markets in the affected areas will be hit. “In recent years a number of countries in South East Asia have developed financial service industries and many claims will be met by local companies. Some liabilities will, however, have been reinsured through the London market and IUA members will be prepared to meet their obligations in this respect,” she adds.
If losses reach the US$10 billion mark, the tsunami will still rank as one of the top natural catastrophe events in terms of insured losses in 2004, behind Hurricane Charley, which produced US$11.7 billion in claims, according to Munich Re data. Hurricanes Charley (US$7.6 billion in losses), Francis (US$4.7 billion in losses) and Jeanne (US$4.5 billion in losses), as well as the Typhoon Songda (US$3 billion in losses) round out the top five loss events of 2004, notwithstanding the tsunami disaster.