Munich Re’s top risk researcher, Gerhard Berz, who heads the Geo Risk Research at the world’s largest reinsurer, told the Deutsche Welle German television channel on Tuesday that the estimate was based on a gut feeling since reliable numbers were not yet available.
The estimate does not reflect the cost to insurers, which is likely to be a relatively small portion of the overall cost and made up mainly of damaged property and insurance cover for casualty.
Deadly waves triggered by the world’s worst earthquake in 40 years wreaked havoc in the coastal regions of Indian Ocean nations from Indonesia to Sri Lanka, killing more than 50,000.
“We have no truly reliable numbers whatsoever, but my gut feeling would say that the economic damage would be clearly in double-digit billions [of euros],” Berz said.
The insurance industry will likely review its risk exposure models, in which catastrophe scenarios centre on risks in single markets and single regions, following this multinational catastrophe and after this autumn’s hurricanes which struck numerous countries in the Carribbean, he added.
Huge tidal waves devoured vast
Analysts have said that the cost of the tsunami was less than the hurricanes that hit the US because there is less insurance coverage and industrial density in south Asia.
They say that typically 20% to 50% of the economic damage is insured. But given the disaster area’s role as a major tourist attraction, insurers could face additional claims for cancelled flights and interrupted holidays.
Analysts estimate the disaster’s costs to leading insurers such as Munich Re to be a low triple-digit million-euro amount.
Executive board member Stefan Heyd said the destruction wreaked by the earthquake and resulting tsunami should hasten efforts to manage climate change.
He wrote in Munich Re’s annual disaster report that the “terrible effects spreading all around the Indian Ocean and reaching as far as the Horn of Africa are a further reminder of the global threat from natural catastrophes”.
“They underline our long-standing demand for prompt and rigorous measures against global climate change. After the disappointing outcome of the recent climate summit in Buenos Aires, time is running out,” he wrote.