Major reinsurers will face new costs after the catastrophe caused by the tsunamis in southern Asia, though experts say the financial impact is likely to less than that of other disasters this year.
Damaged vehicles and debris in Phuket, Thailand
The extent of the damage following Sunday's deadly waves is still impossible to predict. The affected region, which includes shores in Indonesia, India, Sri Lanka, Thailand and even Africa, is simply too large, too little is known about the situation, and the information coming out of the region is too diffuse. Experts say it will take several days before there is reliable information about the number of victims and the scope of the damage.
It's possible, however, that the cost for reinsurers will be less than that incurred by the hurricanes earlier this year that wreaked havoc in the Caribbean, Florida, and parts of Asia.
"My guess is that the overall damage from the underwater earthquake will turn out to be less than the damage caused by the hurricanes in Florida and the Caribbean," said Konrad Becker, analyst with Merck Finck.
"The earthquake unfortunately hit the poorest of the poor, which is why the property insurance values will be lower," another analyst said on condition of anonymity.
Lower property damage
Acehnese people walk past a destroyed market building in Banda Aceh Monday, Dec. 27, 2004
In comparison with the hurricanes that wiped out entire districts in Florida and caused considerable damage in Miami, the effects of the tsunamis was limited to the coastal areas of the affected countries. No large cities, industrial parks or factories with higher insurance values were devastated.
Insurance firms are so far holding back with their prognoses of the extent of tsunami-related damage claims.
"It's still too early for us to assess the effects this could have for Swiss Re," said Simone Lauper, press spokesperson for Swiss Re, the world's second largest reinsurer. "We still don't have damage reports from the affected countries, because the information on the ground is still unclear."
A risk research expert at top reinsurer Munich Re told DW-TV that the disaster has caused economic damage in excess of
€10 billion. Gerhard Berz, head of Geo Risk Research at the Munich-based firm, said the estimate was based on a "gut feeling," but added that the estimate does not reflect the cost to the insurance industry.
Experts predict that costs for Munich Re and Swiss Re will be comparable. On Monday, shares in both companies ended down more than 1.6 percent.
But shares in Germany's Hannover Re recouped most of their losses after the company said it would maintain its earnings forecast for this year, despite the damage caused by the tsunamis. Hannover Re's shares fell 0.1 percent. A company spokesperson said tsunami-related damage claims were expected to be in the low-double-digit millions of euros, well below claims of about €300 million ($400 million) from the four major hurricanes that hit the United States.
According to research from Swiss Re, 2004 was already the most expensive year to date for the reinsurance sector, even before the tsunamis hit. A string of disasters both natural and man-made have prompted claims to property insurers of about $42 billion, Swiss Re estimated.