Insurance prices around the world are set to rise in the wake of the devastating floods in Thailand, according to Aon Benfield, a risk assessment firm. The Thai floods are yet another catastrophic event that has occurred in 2011. Paired with rampaging storms in the U.S. and a horrific earthquake and tsunami in Japan, the floods have done major financial damage to the worldwide insurance industry. Estimates regarding the damage done to properties from the flooding in Thailand hovers around $10 billion, but these estimates only factor in the damage done to buildings, not the havoc the floods have caused in the global supply chain.
Aon analysts say that the disaster will lend momentum to insurers who are looking to raise rates. The fact that the reinsurance industry is also looking to raise rates by as much as 10% in some parts of the world has added pressure on insurance companies to generate higher revenue to recover from recent disasters. By how much insurers are looking to raise rates varies from company to company, but in the U.S. rates may be affected by the changing foreclosure laws that will require reinsurers to hold more capital.
2011 has been one of the most disastrous years in terms of insurance and loss. The industry is looking to 2012 and hoping for a more lenient year in natural disasters. At present, the road to recovery looks to be long and arduous.