Thai floods: One year later
Lloyd’s of London analysts examine impact of Thai floods
Just over a year ago, severe flooding in Thailand caused by a powerful and unforgiving monsoon season caused havoc in Bangkok and other cities throughout the country. Analysts from Lloyd’s of London have come together to examine the effects that the Thai floods had on the insurance industry and the country. The floods produced some $45.7 billion in damages, $12 billion of which was shouldered by insurance and reinsurance companies that operate in the country. Lloyd’s of London itself accounted for $2.2 billion in damages.
Analysts suggest business interruptions caused by floods were major problem
According to Lloyd’s analysts, the major of insured losses that insurers saw came from claims regarding business interruption due to the floods. Flooding began in July 25, 2011, in the wake of the powerful tropical Storm Nock-Ten. For months afterward, flood waters spread throughout the country, eventually reaching Bangkok in October, 2011. By the time floods reached Bangkok, many cities were already experiencing waters as high as 10 feet. This caused significant disruption for the country’s businesses.
Thailand’s place in global supply chain brought to attention
According to Lloyd’s of London, the Thai floods caused serious problems for the global supply chain of electronics and equipment important to the auto industry. Analysts note that the floods brought the importance of Thailand in terms of its position in the supply chain into the limelight. This suggests that the country’s problems may be balanced with some benefits, as major companies that rely on an efficient supply chain invest money into the country in order to mitigate any future disruptions that could have a significant financial impact.
Thai floods may have insurers taking flood risk more seriously
Analysts suggest that the Thai floods present a promising learning opportunity for the insurance industry. Insurers may be encouraged to take flood risk more seriously and formulate policies that mitigate their exposure to these disasters while also providing assistance to consumers that would be affected by floods. With powerful storms seeming to become the norm around the world, taking flood risk more seriously may be an appropriate move for many insurance companies.