Tidal Wave Update: Death Toll Mounts; Aid Effort Underway; AIG Pledge

December 28, 2004

As scenes of utter devastation played across the world’s television screens, local authorities and volunteer rescue workers continued the grim job of collecting and burying the bodies of the victims who perished in the massive onslaught of tidal waves in the Indian Ocean (See previous article).

A BBC report quoted UN emergency relief co-ordinator Jan Egeland as indicating that the effects of Sunday’s disaster could be “the biggest ever because many more people live in exposed areas than ever before.” Given the widespread destruction, the relief operations are expected to cost billions of dollars. The UN and private relief agencies expect to mount an unprecedented effort in the affected countries.

Meanwhile the death toll continues to mount. The BBC said some 38,000 people are assumed to have died. French television put the number at 40,000, with at least as many people missing and unaccounted for. The worst hit areas are in the Banda Aceh region of the Indonesian Island of Sumatra, not far from the epicenter of the undersea quake that triggered the tsunamis. 19,000 persons are confirmed to have died in the region.

In Sri Lanka the death toll has climbed to 13,000, but with many coastal communities still cut off, authorities expect that figure to increase to as many as 20,000.

French television reported from Thailand that 750 persons, including a number of European tourists, had died when waves submerged a luxury hotel in Khao Lak. So far 1,400 people have been reported dead in Thailand, but as elsewhere, authorities expect the toll to rise.

In India the official total is 4,371, but authorities are almost certain that it will be much higher. There have been few reports from the isolated Adaman and Nicobar Islands, two groups of low-lying islands in the eastern Indian Ocean. The number of dead there could exceed 7,000.

Economic devastation has occurred on a huge scale, as fishing fleets have been destroyed, coastal plains and ports have been flooded, and tourist facilities, upon which many localities in the area depend, have been damaged or destroyed. It will take great effort, years of work and a lot of money to restore the many regions hit by the tidal waves.

While the insurance industry will undoubtedly pay part of the cost, most analysts have so far indicated that the insured losses will be considerably less than those caused by the Florida hurricanes. None of the world’s major reinsurers have issued any estimates, but the general consensus appears to be that the minimal insured loss will be at least $1 billion, and could go as high as $5 billion. In addition to the big reinsurers – Munich Re, Swiss Re, Hannover Re, Lloyd’s, etc. -Bermuda insurers, – ACE Limited, XL capital, RenaisannceRe and others – may have significant exposures.

Most of that exposure is to European, American, Japanese and Australian hotel owners and tour operators. Very few of the local businesses in the region carry catastrophe insurance of any kind, which puts an added burden on public and private efforts to help them.

One company that seems prepared to do so is the American International Group. Its chairman, Maurice R. “Hank” Greenberg, issued a statement calling the events “a tremendous tragedy that resulted in a huge loss of life, and left millions of people in need of help.” Greenberg said “AIG and the Starr Foundation will be contributing to relief efforts, and AIG employees are being encouraged to contribute to the AIG Disaster Relief Fund. Their contributions will be matched 100 per cent.”

He also indicated: “In terms of AIG’s business, we have managers and claims professionals working in those affected areas where we have policy holders. Early reports from the countries impacted by the tragedy suggest that AIG will not have significant business exposures or losses. We will provide updates when additional information becomes available.”

Ed Note: If “APRIL is the cruelest month,” December, and especially the day after Christmas, has recently become the most deadly. On Dec. 26 1999 the windstorms Lothar (followed by Martin) leveled large parts of France, Switzerland, Spain and Northern Italy. Last year the Bam earthquake in Iran – on Dec. 26 – took over 30,000 lives. In 2001, Bush fires ravaged large tracts of eastern Australia.

Philosophers and theologians will have to ponder whether there’s any significance in this, but it makes little difference to the thousands who mourn their dead, and the millions whose homes and livelihoods have been destroyed. They need help from the rest of the world. The IJ urges all its readers to help the relief effort by making a donation to the aid agency of your choice.

Some suggestions include: Care International, the International Federation of the Red Cross, Medecins Sans Frontieres (Doctors without Borders), Oxfam, Save The Children, Unicef and World Vision. Details are easily available on their respective Web sites.

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