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Insurance industry

Insurance Sector Exposed to $13 Billion in Asian Earthquake Tsunami Damage

Strategic Insights

— 1 min read

As the extent of damage from the Asian earthquake and subsequent tsunami becomes clearer, the insurance sector is bracing for significant losses. The Lloyd's of London reinsurance market has estimated that the insurance sector's total exposure to the tsunamis could top $13 billion. Major reinsurers such as Munich Re, Swiss Reinsurance, and Hannover Re have seen their shares fall on European stock exchanges, as smaller local insurance companies rely on the big international reinsurers to cover their liabilities. In Australia, IAG, the country's largest general insurer, and Promina were slightly down in trading, with IAG's Chief Financial Officer, Neil Drabsch, identifying six categories of possible liabilities, including resorts, personal accidents, marine cover, travel insurance, and business interruption.

Key Takeaways:

  • The Lloyd's of London reinsurance market has estimated the insurance sector's total exposure to the tsunamis could top $13 billion.
  • Major reinsurers Munich Re, Swiss Reinsurance, and Hannover Re have seen their shares fall on European stock exchanges.
  • IAG, Australia's largest general insurer, has identified six categories of possible liabilities, including resorts, personal accidents, marine cover, travel insurance, and business interruption.
  • Flight Centre, the nation's biggest travel agency, will waive its cancellation fees for customers travelling to affected areas up until January 15.
  • Qantas will provide full refunds and waive fees for changes to flights or packages to the affected areas up until January 31.

Statistics:

  • $13 billion estimated total exposure to the tsunamis for the insurance sector (Source: Lloyd's of London reinsurance market).
  • 29 cents drop in QBE Insurance shares to $14.91 (Source: QBE Insurance).
  • 4 cents drop in IAG shares to $6.34 (Source: IAG).
  • Tens of customers, rather than hundreds, are cancelling flights with Qantas (Source: Qantas spokesman Michael Sharp).
  • 14 cents drop in Flight Centre shares to $18.61 (Source: Flight Centre).

Sources:

  • "QBE expects no impact on earnings from Asian floods" by Duncan Hughes and Fleur Leyden, The Australian (no date).
  • Insurance Council of Australia (no date).
  • Qantas (no date).
  • Flight Centre (no date).

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