* Mitsui, Tokio Marine see losses of 130 bln yen, 100 bln
* Lloyd's of London asks Singapore syndicates to assess
* Thailand "critical" in global supply chain - Marsh
By Myles Neligan
LONDON, Nov 18 Insurers are bracing
themselves for claims in excess of $10 billion after floods in
Thailand disabled major foreign-owned manufacturing operations
there, adding to an already record-breaking natural catastrophe
bill this year.
Analysts and industry executives say it is too soon to gauge
the full impact of the floods, Thailand's worst in 50 years, as
the waters have only just started to recede more than three
months after they first rose.
But Thailand's Office of Insurance Commission, the industry
regulator, has provisionally estimated an insured loss of about
$6.5 billion, according to Standard & Poor's, while insurers and
brokers informally put the impact at closer to $10 billion.
"It sounds like it's going to be that sort of magnitude,,
maybe even a little bit more," said Execution Noble analyst Joy
"It's still ongoing, it's still developing every day and I
don't think anyone can get there to assess what's going on."
Reinsurers such as Munich Re and Swiss Re
are expected to pick up a proportion of the losses
from Thai and Japanese primary insurers, heavily exposed because
many of their domestic corporate customers have set up
operations in Thailand to escape the strong yen.
Japanese insurers Mitsui and Tokio Marine on Friday
said the floods could cost them 130 billion yen ($1.7 billion)
and 100 billion yen respectively.
Business interruption claims are likely to account for a big
chunk of the costs to insurers, with companies worldwide hit by
a shortage of components after the floods knocked out many
foreign-owned makers of hi-tech gear.
"Thailand is such a critical cog in the global supply chain
for some of these industries," said Gary Lynch, head of supply
chain risk at Marsh Risk Consulting, part of insurance broker
"The concentration of organisations and support
organisations affected is probably greater than we've seen in
any other event."
British TV decoder maker Pace on Thursday issued a
profit warning, blaming uncertainty over the cost of computer
hard drives after the Thai operations of its main supplier, U.S.
group Western Digital, succumbed to the floods in October.
Seven major Thai industrial estates have been affected,
disrupting the operations of Japanese manufacturers including
Nissan, Sony, Canon, Panasonic
and Honda, while across the country, a total
of 14,000 businesses have closed, according to reinsurance
broker Guy Carpenter.
"Flood damage can be rather severe because Thailand is not
really an emerging market when it comes to industrial
facilities," Ulrich Wallin, Chief Executive of reinsurer
Hannover Re said last week, estimating the company's
own exposure at about 100 million euros ($135 million).
The Thai floods come on top of a spate of catastrophes,
including the March 11 Japanese earthquake, which inflicted a
record $70 billion in losses on the insurance industry in the
first half of 2011 alone, according to Swiss Re.
The Lloyd's of London insurance market has asked syndicates
at its Singapore outpost to assess their exposure, a Lloyd's
spokeswoman said on Friday, adding that it was too early to
provide a loss estimate for the market.
One consequence of the floods has been an unexpected
increase in insurance claims related to the March earthquake
from Japanese manufacturers who moved to Thailand to minimise
disruption after the earth tremor, according to law firm
Reynolds Porter Chamberlain (RPC).
"Moving production from Japan to Thailand was a 'Plan B,'"
said RPC Legal Director in Reinsurance Daniel Saville.
"The question now is whether those businesses have a 'Plan