As the waters in Thailand begin to recede, the cost for insurers is becoming more clear. Swiss Re has estimated that floods, which caused hundreds of deaths and damaged approximately 1500 industrial facilities, will cause a market loss of USD 8 to 10 billion.
Water levels still remain high in some areas though, making it difficult for an accurate estimation.
Since July, Thailand has experienced it’s highest rainfall in 50 years. More than 600 people have died and millions of tons of 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,” says Swiss Re’s 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 car-makers or digital and electrical goods manufacturers.”
Thailand is an important link in the global manufacturing industry and is the world’s second largest producer of hard disk drives for computers.
The total insured exposure in these industrial estates is estimated by the Thai Office of Insurance Commission at USD 20 billion.
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 currently estimates the total insured market loss to be in the range of USD 8 to 11 billion. Water levels are now receding but remain high in some areas of Thailand, so it will be difficult to make an accurate estimation for some time, Swiss Re said.
