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Member, Beacon International Group, Ltd.
LONDON— Lloyd’s of London said recent catastrophes in Japan, New Zealand and Australia caused about $3.8 billion in losses for insurers in its market and it expects insurance prices to firm.
As a result of the March 11 earthquake in Japan, estimated net claims before taxes for Lloyd’s insurers totaled about $1.95 billion. Another $1.2 billion in claims resulted from the New Zealand earthquake, and losses are estimated at $650 million from floods in Australia, Lloyd’s said Friday.
Lloyd’s said the losses would not have a “material” effect on its capital nor are they expected to affect its central fund.
Expect prices to firm
“The Lloyd’s market is as well-capitalized as it has ever been and, while claims from all three events could still evolve over time, the market’s total exposure is well within the worst-case scenarios we model and prepare for,” Lloyd’s CEO Richard Ward said in a statement.
He said he expects insurance prices to firm as a result of first-quarter events as well as recent tornadoes in the United States.
The preliminary estimates draw on market share analysis, mathematical modeling, contracts in place and estimates from each insurer, Lloyd’s said.
Speculation on future
Insurers have battled for customers in recent years by slashing their prices. But after the recent catastrophes, market players have discussed what might happen if insurers face significant losses in the coming months.
In one recent example, the Bermuda reinsurer Hiscox Ltd. said overall rates for U.S. catastrophe reinsurance business likely will increase about 10% during June and July renewals.
Catastrophe modeling firm EQECAT Inc. recently increased its estimate of insured losses from Japan alone to as high as $39 billion.
OAKLAND, Calif. (Reuters)—Catastrophe modeling company EQECAT Inc. on Monday sharply increased its estimate of insured losses from the March 11 earthquake in Japan, saying they might now reach as high as $39 billion.