NZ insurers study impact of tsunami

The tsunami was unlikely to have a big impact on the local insurance industry, Insurance Council chief executive Chris Ryan said yesterday.

He said that at first there would be few, if any, effects on the pricing and availability of insurance. However, it was too early to predict the full impact of the disaster.

Two of Australia's biggest insurers, QBE and IAG, said on Wednesday that insured losses from the tsunami would not have a big impact on their businesses. Ryan said New Zealand companies were also unlikely to be materially affected.

However, any impact on the global insurance industry would be felt here.

"But I don't think it will be something as defining as the World Trade Centre in terms of costs," said Ryan.

The September 11, 2001, attack on New York created the largest loss in the history of insurance.

Estimated payouts were US$60 billion, which significantly reduced insurers' capital bases.

International reinsurance companies, who financially back the policies written by insurers, subsequently led a removal of cover for acts of terrorism.

Reinsurers are likely to bear the brunt of costs stemming from the Indian Ocean disaster. However, levels of insurance cover in the affected region are low.

Munich Re, the world's biggest reinsurer, says based on information received so far, the tsunami is likely to cost it less than 100 million euros ($190 million).

Meanwhile, Ryan said the disaster was another reminder that this country was an island nation with a real risk of tsunamis. He said local insurance policies generally covered tsunamis and earthquakes.