Event is ‘wake up call’ for the industry
Munich Re has admitted that it is likely to take a €500m claims hit from the recent Thai floods.
The country’s worst floods in 50 years resulted in widespread inundation across the south-east Asian country’s central plain, including parts of Bangkok.
As well as claiming the lives of some 600 people, the flood submerged hundreds of thousands of houses and seven major industrial areas with production facilities belonging mainly to Japanese groups.
Approximately 25% of the world’s supply of components for computer hard drives is manufactured in Thailand, resulting in production delays for many electronic manufacturers
As well as the buildings themselves, the floods damaged the often expensive production facilities housed in them.
Due to the water still draining away in some areas, it remains difficult to estimate losses in the worst affected industrial areas around Bangkok, but Munich Re has estimated that the final tally could be €500m net before tax.
Board member Torsten Jeworrek said: “Thailand is a wake-up call. In emerging countries of growing significance to the interconnected global economy, the provisions made for and adaptation to such natural hazards need to be improved in order to contain the losses.”
“The insurance industry is willing and able to help in this respect, primarily of course by carrying risks at commensurate prices, terms and conditions.”
He added that the Thai floods had demonstrated once again how vulnerable the networked world economy is. “It is in the interests of companies to secure alternative key suppliers they can resort to in order to maintain the production process when extreme cases arise. As reinsurers, we will take this risk management aspect even more into account in our pricing of contingent business interruption covers in future”, Jeworrek said.
No comments yet