Just three months in and 2011 looks like it's going to be a bad year for insurance companies right around the world.
As The Wall Street Journal reports, even before the powerful 8.9 magnitude earthquake that hit Japan on Friday added to their losses, claims from winter storms in the United States, floods in Australia and a severe earthquake in New Zealand amounted to more than companies like Munich Re or Swiss Re, the world's number one and two reinsurers, had put aside for the entire year. Reinsurers are the outfits that provide the financial backing for insurance companies.
No one was expecting this and they haven't even begun to work out the damage from the latest monster to hit Japan.
According to Bloomberg, reinsurers now face losses of $10 billion.
All this means that prices for reinsurance cover will have to rise in 2012, and that will flow through to higher premiums everywhere. The freakish weather we are now seeing around the world will ensure that.
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