Insurers count the cost of disaster year
This column last week pointed out that bankers have little to cheer about this Christmas, and our insurance friends tell us their outlook is also bleak.
Insurers have been hard hit by the floods in Thailand in October, where floodwater damaged properties and swamped about 1,500 factories in seven industrial estates in the central province and other areas. This has caused supply-chain disruptions for Japanese companies such as Toyota, Panasonic, Honda, Canon and Sony. Some western firms, such as Apple and Coca-Cola, also have factories there.
Swiss Re last week said that claims arising from the Thailand flooding were expected to cost it US$600 million. For the whole insurance industry worldwide, the loss is estimated at US$8 billion to US$11 billion in claims.
Insurers in the first half of this year have had to pay for a number of natural disasters, including flooding in Australia, the earthquake in New Zealand and the deadly earthquake and tsunami in Japan in March.
The disaster in Japan is one of the costliest catastrophes in history, having caused insured losses of US$12 billion to US$25 billion, according to risk modelling firm Eqecat.
The largest loss caused by a natural catastrophe was in 2005, when Hurricane Katrina hit the US, costing insurers US$62 billion.
Insurers said natural disasters this year happened in countries where many companies and individuals have insurance protection, which goes some way to explain why their losses are expected to be so high.
The earthquake in China last year and in 2008 incurred relatively modest losses for global insurers because not all mainlanders had insurance cover.
And of those who bought insurance cover, few bought them from foreign firms which still have only 1.1 per cent market share in China.
Insurers this year were also hard hit by poor investment markets as the euro-zone debt crisis smashed investor confidence in equity markets and sent sovereign bond yields soaring. Many insurers plan to raise prices next year to cover their losses. Female first Hong Kong Institute of Certified Public Accountants may well have its first female president in its almost 40-year history.
Susanna Chiu, director of Li & Fung Development (China) and now a vice-president of the HKICPA, is a frontrunner in elections to be held on Friday.
Chiu, who has volunteered on various HKICPA committees since 1993, has served on the council since 2004 and has been vice-president for the past two years.
Her major competitor is Keith Pogson, also a vice-president of the HKICPA and the Asia-Pacific financial services leader of Ernst & Young.
Both Chiu and Pogson are running for re-election in the election today which will see 30,000 bean counters select seven members out of 14 candidates as council members.
On Friday, the new council members will elect the president.
I will update you next week.