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December 28, 2004 at 07:00 PM
No one really knows how much the recent Southeast Asian earthquake and tsunamis will cost life insurers and life reinsurers, according to analysts at Fitch Ratings, Chicago.[@@]
An earthquake off the coast of Sumatra with a magnitude of 9.0 caused enormous waves, or tsunamis, that appear to have killed more than 65,000 residents of India, Indonesia, Sri Lanka, Thailand and other countries.
Insurance company executives in the affected region and the rest of the world mourned the terrible human suffering caused by the disasters.
The earthquake and tsunamis “are a tremendous tragedy that resulted in a huge loss of life, and left millions of people in need of help,” according to a statement by Maurice Greenberg, chairman of American International Group Inc., New York.
AIG and the Starr Foundation, an affiliated charity, will be contributing to relief efforts, and AIG will match employee contributions to a disaster relief fund 100%, AIG says.
The experts are just starting to assess the effect of the tragic disasters on claim costs.
“At present, there are no reliable estimates of the insured losses resulting from this earthquake,” Fitch analysts write in a comment on the disasters. “To date, none of the major catastrophe modeling firms has issued any insured loss estimates.”
It’s not clear how many of the victims who lived in the affected region owned substantial amounts of life insurance, but the tsunamis hit destinations that were popular with tourists at the peak of tourism season. A high percentage of the foreign tourists killed may have owned life insurance policies with a face value of $100,000 or higher.
The event “has the potential to generate significant life insurance and travel accident claims,” the Fitch analysts write. “It will likely be some time before all of the life insurance claims are submitted as large numbers of people remain unaccounted for.”
