Swiss Re puts Thai flood losses at $600m

Swiss Re estimates the recent Thai floods will cost it $600m, net of tax and retrocession.

The reinsurer said that the estimate was subject to uncertainty because water levels remain high in some areas, making accurate loss assessment difficult.

The floods, which began in July, have caused more than 600 deaths and flooded around 1,500 industrial facilities.

The Thai Office of Insurance Commission estimates the insured losses from the affected industrial estates at $20bn. According to Swiss Re, 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 estimates the total insured market loss to be in the range of $8bn to $11bn.

Since  July, 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. 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,” said Swiss Re 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.”

Swiss Re said the industrial facilities affected consist mainly of factories belonging to and supplying Japanese companies – and to a lesser extent Western based international companies.