Swiss Re, the world's secondbiggest reinsurance company, yesterday doubled its estimates for the likely loss to the insurance industry from Hurricane Katrina and more than doubled the initial estimate for claims the company itself would face.
The assessment from a group respected for its forecasting comes as leaders of the world reinsurance industry prepare to meet today in Monte Carlo for an annual industry gathering crucial in discussing premium levels for the year ahead.
The company warned that the apparently growing incidence of catastrophes would inevitably affect premiums. "We are witnessing increasing natural catastrophe events across the globe, affecting economies and societies with a higher frequency and severity," said John Coomber, the chief executive.
"Price levels in the upcoming renewals must be adjusted to reflect these developments."
Swiss Re said Hurricane Katrina would probably lead to total claims on the industry of about $40 billion (€33 billion), twice the $20 billion it estimated.
That would rank it as the world's most expensive hurricane, ahead of the $22 billion cost, in today's prices, of Hurricane Andrew in 1992, and significantly more expensive than the storms that hit the Caribbean and the US Gulf coast last year.
Swiss Re also raised estimates for the claims it expected to face itself to $1.2 billion before tax from $500 million at the end of last month.
Swiss Re said accurate predictions remained difficult, "due to the unique nature of the event, the complexity and the magnitude of destruction caused".
It said it would have to dip into the $1 billion reserves set aside for extremely large claims, usually natural catastrophes. - (Financial Times service)
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