FSA asks insurers to provide estimate of claims |
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Tue, 13 Sep 2005 00:35
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LONDON: The Financial Services Authority has sought information from British insurers and reinsurers on the extent of impact these companies would have as a result of Hurricane Katrina.
Initial calculations that the losses would be in the range of $50 to $60 billion, have triggered fears that several insurance companies may just collapse. The claims are likely to surpass those of the World Trade Centre attacks four years ago.
An FSA spokesperson, however, dismissed the queries as routine supervision. Creation of any rescue fund, analysts observe, would need Treasury approval.
The FSA is known to have asked the insurers and reinsurers to specify their liabilities and whether they have enough capital in reserve to meet the exigencies of payments.
The Lloyd's of London insurance market has sought details of claims and it said it expects to receive significant claims from offshore oil and gas platforms in the Gulf of Mexico, which were extensively damaged, and from property owners and businesses.
One of Lloyd's members, Amlin, has provisionally valued its net hit at 60 million pounds, mostly from commercial property, reinsurance and energy risks. U.K.-listed reinsurer operating in Bermuda, Goshawk, is reported as trying to raise fresh capital.
Larger companies are yet to do an evaluation. Preliminary accounts suggest that Swiss Re will lose 500 million Euros, Munich Re 400 million Euros and Hannover Re 250 million Euros.
While no one wants to predict at this time what the ultimate amount would be, mainly because the cost of flood damage is picked up by the federal government. There could be disputes in explaining what is lost by the hurricane and what is list as a result of the flooding.
The Louisiana state commissioner has asked insurance companies to extend the claims period, so that residents have time to put their affairs in order. This will mean the insurance companies will not be able to withdraw cover if further storms hit the stricken city.
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