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18th of May 2012

Thai floods covered by captives and foreign insurers

Vicky Beckett 25/11/2011

Captives and foreign insurers will cover the majority of insurance losses from the Thai floods, which could reach $20bn.
 
Almost all of the losses will come from manufacturing and supply chains, with only 1% of residential properties having flood insurance.
 
Some losses will also be claimed by automotive captives.
 
The majority of Thai multinational firms use foreign insurers or captives.
 
Howard Jones, head of financial services and tax for Mazars, said: “The Thai losses would appear to include property and business interruption for major US and Japanese companies.
 
“Losses that captives suffer will really depend on the level and type of risks underwritten.  Captives should be used as part of a groups risk management strategy and is likely to be in conjunction with commercial insurance.
 
“When added to all the other events in the year to date, I wonder how this would affect rates, presumably they will continue to harden, and that this may result in increased business being written by captives.”
 
Japanese insurers write most of the commercial property/casualty business in Thailand.
 
Unless the event limit might be breached, Japanese insurers make significant use of reinsurance, so the net impact to them on a risk basis is not expected to be significant.

Tags: Captive, Flooding, Foriegn, Hard market, Howard Jones, Insurance, Japanese, Mazars, Property & casualty, Risks, Thailand

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