Devastating floods in Thailand may have a global impact, according to insurers. Thailand is a critical point in the global supply chain, says Gary Lynch, head of supply chain risk at Marsh Risk Consulting. Widespread flooding has closed more than 14,000 businesses, including distribution centers for Sony, Canon and Nissan. The disruption in the supply chain could have far reaching consequences in the U.S., the UK and throughout Europe. Lloyd’s of London is now petitioning Thailand insurance and risk firms to assess the risk exposure they see in the nation.
Thailand’s Office of Insurance Commission, the chief regulatory authority for the nation, estimates that insured losses could be as high as $6 billion. Other insurers, including Lloyd’s of London, estimate that the damage will be much higher, saying that insured losses would be as high as $10 billion. Reinsurance companies Munich Re and Swiss Re are echoing the estimates of their counterparts and are likely to help shoulder the financial burden.
The news hits particularly hard for Japanese insurers who have fled their home country to escape mounting domestic costs. These insurers are still recovering from the disastrous events that befell Japan earlier in the year and the Thailand floods will only add to the stress.
Thailand’s flood is the worst the nation has seen in 50 years. Waters have only recently begun to recede, revealing the long, arduous road of recovery that lies ahead.