Insurance payouts: Big or small?

80% of 140 billion baht in losses covered by Japanese insurers & foreign reinsurers, but only 4.3% insured compared with US (8%) & UK (12.4%)

airport

Photo of flood-damaged Don Mueang Airport, like many places usually teeming with people, now an eerie ghost town with its ground floor flooded. 

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Insurance losses 'manageable'

Flood losses for local non-life insurers are expected to be manageable and should not lead to widespread financial strain, says Fitch Ratings.

The ratings agency noted that flood damage was now expected to reach up to US$4 billion, but it would take time for catastrophe-modelling firms and loss adjusters to estimate insured losses.

"Many lines of insurance will be affected, including industrial all risk, property, motor, business interruption and, to a lesser extent, life insurance," it said.

Many factories in the affected areas, especially car manufacturers, have ceased production, and the ultimate insured loss will be partly predicated on the speed with which businesses resume operations.

Fitch noted that insured losses from floods were expected to be "markedly lower" than economic losses, as Thailand's insurance coverage is low compared with more established markets.

A Swiss Re study shows local insurance penetration, measured by premiums as a percentage of gross domestic product, was 4.3% last year, compared with 8% in the US and 12.4% in the UK. 

The Office of the Insurance Commission (OIC) estimates total losses at 140 billion baht to date including damage at seven industrial estates, although assessments are continuing.

Of these losses, 80% are covered by Japanese insurers with the total sum insured of 456 billion baht, said the OIC.

"While the damage could be on a much larger scale once the full assessment has been completed, Fitch believes Japanese insurers are unlikely to be significantly affected, given that 85% of the coverage is being ceded to foreign reinsurers," it said.

Insurers likely to be affected include MSIG Insurance, Aioi Bangkok Insurance, Sompo Japanese Insurance and Tokio Marine Sri Muang.

(Source: Bangkok Post,
Insurance losses 'manageable', 31/10/2011, link)

Insurance Industry Vocabulary


teeming with people - crowded with people moving around
eerie -
scary, strange and frightening (making you feel nervous) 
ghost town -
an abandoned town; a town without people, that once had people living it in the past (See Wikipedia)

insurance - a system of protection against loss, a person pays money every month (premiums) for a guarantee that the company will pay them money if they or their property is damaged or lost (See Wikipedia) การประกันภัย

insurance policy -
the contract between the insurance company that sells insurance and the person with the insurance (policyholder) (See Wikipedia)

insurance premium -
the amount charged for an insurance policy (the "insurance coverage" in the policy) 
premium -
insurance premium

coverage - the number of people in the programme, the number of participants
insurance policy X covers Y and Z - if bad events Y or Z happen (flood, earthquake, tsunami, etc) then the insurance policy will pay money

insurance coverage
- insurance protection, when a person or a company has insurance that will pay them money to help them if some bad event happens
established - has existed for a long time ก่อตั้่ง be in a successful position over a long period of time มีตำแหน่งที่มั่นคง

Thailand's insurance coverage is low compared with more established markets.

penetration - actual users of a system (phone, internet, etc) as a percentage of total possible users (potential users)
local insurance penetration - the percentage of people and businesses that have insurance

lines of insurance - different kinds of insurance (also: insurance lines)
industrial all risk insurance - provides companies with insurance against "all risks" 

property
insurance - insurance that covers the damage or loss of land and buildings or a home built on the land (real estate) (See Wikipedia)
motor insurance - "insurance purchased for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions" (See Wikipedia)

business interruption
insurance - insurance that covers loss of income and when a business is interrupted due to some event beyond their control such as a flood or other disaster (See Wikipedia)
life insurance - insurance that is paid to a person's family if they die (See Wikipedia)

insurer -
an "insurance company" in the business of selling "insurance policies"
local - in this country (here: Thailand)
local non-life insurers

loss adjuster -
employees of an insurance company who determine how much the company must pay when there is a bad event, "investigate insurance claims by interviewing the claimant and witnesses, consulting police and hospital records, and inspecting property damage to determine the extent of the company’s liability", also called a "claims adjustor" or "insurance adjustor" (See Wikipedia)

insurance claim
- a request to your insurance company for an amount of money to be paid for loss or damage for which you are insured
insurance payouts - the amount of money paid by the insurance company for damage to a person who has insurance

insured losses - losses included in your "insurance premium" from some accident, disaster, bad event
uninsured losses - losses not included in your "insurance premium" from some accident, disaster, bad event

estimate - to say what you think an amount or value is or will be, either by using available information or by guessing คาดคะเน โดยประมาณ
estimate insured losses  

marked (adjective) - noticeable, easy to see
markedly lower than
(adverb) - noticeably lower than (you can easily see that it is lower than)
insured losses from floods "markedly lower" than economic losses

expected - believe will happen คาดว่า (จะเกิดขึ้น)
manageable - will be able to "manage" the problem (handle the problem, solve the problem, deal with the problem); not too difficult, but not easy either 
losses expected to be manageable - they believe that the losses will

reinsurers - companies that buy insurance policies from other countries as part of risk management, this practice is called "reinsurance", "the main reason for insurers to buy reinsurance is to transfer risk from the insurer to the reinsurer" (See Wikipedia)

ceded - give control of something to someone else, handed over to
ceded to foreign reinsurers - control given to foreign reinsurers (who insure part of the losses)

believes Japanese insurers are unlikely to be significantly affected, given that 85% of the coverage is being ceded to foreign reinsurers

risk - danger, how likely or possible it is for a bad event to happen that causes harm and damage ความเสี่ยง
property - land and buildings on the land

widespread - happening or existing in many places, or affecting many people อย่างแพร่หลาย
strain - when something is forced to do more than it is able to do which may cause it to break 
financial -
connected with money and finance
finance -
the activity and process of raising and getting money for businesses (projects, ventures)

financial strain - 
when a reduction in income makes it difficult to pay the bills (here: if floods slow economy down, incomes of businesses and people may be reduced)
widespread financial strain -
when many people and businesses have problems paying their bills 

Fitch Ratings -
an international credit rating agency dual-headquartered in New York City and London. It was one of the three Nationally Recognized Statistical Rating Organizations (NRSRO) designated by the U.S. Securities and Exchange Commission in 1975, together with Moody's and Standard & Poor's (See Wikipedia)
credit rating -
a measure of credit worthiness, a measure of the risk of loaning to a borrower, a measure of how likely (See Wikipedia) การจัดอันดับความน่าเชื่อถือ
credit rating agency -
a company that estimates how likely a borrower is to not pay back the money it has borrowed (default) and assigns a numerical score to measure this (credit rating) (See Wikipedia) หน่วยงานจัดอันดับความน่าเชื่อถือ

expected to reach up to US$4 billion

catastrophe-modelling firms -
companies that have a mathematical model that can be used to calculate expected losses if a disaster such as a flood happens

extent - size ขนาด
to a lesser extent - less true for it

many lines of insurance will be affected, including industrial all risk, property, motor, business interruption and, to a lesser extent, life insurance

ceased production -
stopped production (stopped production of goods at a factory)

ultimate
- the final result after a long series of events
ultimate insured loss - the insured loss (calculated in the end, after all damage has been done)

resume
- start again after stopping (ธุรกิจ) ที่ฟื้นตัวอีกครั้ง ดำเนินต่อไปใหม่, กลับมาอีกครั้ง
resume operations - when a business starts operating again (producing and selling goods)

X predicted on Y -
X depends on Y (X can happen, if Y happens)
X partly predicated on Y - X partly depends on Y (X more likely to happen, if Y happens)

ultimate insured loss will be partly predicated on the speed with which businesses resume operations.

gross domestic product (GDP) - the total value of all the goods and services produced by a country in one year (See Wikipedia)
domestic - within the country ภายในประเทศ

estimates - guesses of what the size, value, amount, cost, etc. of something might be การประมาณค่า
estimates total losses at 140 billion baht to date

assessment - a judgment or opinion after studying and evaluating a situation การประเมิณสถานการณ์
assessments are continuing

full assessment - everything assessed, 100% assessed
partial assessment -
not everything assessed, less than 100% assessed

scale
- size (relative size)
damage on a much larger scale - many more things severely damaged or destroyed

the damage could be on a much larger scale once the full assessment has been completed

significantly - in an important way อย่างสำคัญ
unlikely to be significantly affected

sum - an amount of something, especially money จำนวนเงิน
sum insured - the amount (of losses) insured
of these losses, 80% are covered by Japanese insurers with the total sum insured of 456 billion baht


About the author

columnist
Writer: Jon Fernquest
Position: Online Writer