The world's biggest reinsurer said Tuesday that the deadly Indian Ocean tsunamis likely will cost around $136 million, saying its exposure to the extensive damage would be limited by low insurance coverage.
The company cautioned that it was too early to offer a "substantiated damage estimate" but said initial information suggested its exposure would be limited and it sees no need to revise its earnings forecasts.
Although insurers were likely to suffer limited losses, the head of Munich Re's Geo Risk unit said the total value of damage to buildings and foundations in the regions affected likely would be at least $13.6 billion.
"Considering the vast area that was affected and the tremendous damage I've seen in TV reports, I'm pretty sure it will reach that magnitude," Gerhard Berz said in a telephone interview.
Berz cautioned that his estimate of total damage was based on his experience with previous natural disasters, and that there wasn't yet enough information to be certain about the costs.
Munich Re said that, even before Sunday's undersea earthquake and tsunamis, 2004 was the most costly year on record for the insurance industry in terms of natural disasters, with insured losses of some $40 billion.
Some $35 billion of those losses resulted from the string of hurricanes — Charley, Frances, Ivan and Jeanne — that hit the southern United States and the Caribbean and from cyclones in Japan, it added.
Previously, the most expensive year for natural disasters was 1992, when Hurricane Andrew hit Florida — accounting for much of the year's total of $26 billion.
Munich Re put the total economic losses this year, including damage that wasn't covered by insurance, at more than $130 billion — twice the 2003 level.
Berz said economic damage from the tsunamis will be tempered by the fact that much of the infrastructure in the Indian Ocean nations affected is less costly than that in the Caribbean and Florida, and by the fact the tsunamis didn't reach far inland.
He said the vacation island of Phuket, in Thailand, probably suffered the most economic damage.
"I'm pretty sure that hotels (around the region) will be able to open again soon," he said. "The question is if tourists will come back."
Reinsurers provide backup for primary insurance companies, enabling the system to spread risk so it can cover losses from major disasters.