Insurers assess storm damage, promise to be fair on claims

  • 2005-01-19
  • From wire reports
TALLINN - Estonia's insurance companies have continued to assess the nationwide damage caused by the severe storm on Jan. 9 's 10 that government officials have said would cost tens of millions of euros to repair.

The top insurance companies told state officials on Jan. 14 that they were ready to pay some 150 million kroons (9.6 million euros) in damages.

"The companies are going to look through all the filed claims and try to find solutions that satisfy their clients," the Financial Supervision Authority said. "For carrying out the assessment of storm damage as speedily as possible, the companies have brought in additional manpower."

Insurers have already begun to pay some claims, even though the total damage sum could grow, the authority said.

In the days after the storm, which flooded entire neighborhoods and demolished cars and roofs, many Estonians were worried that insurance companies would refuse to recognize claims since such a natural disaster was not specifically mentioned in policies. Most insurers, however, promised not to interpret policies exclusively to their own benefit.

Still, despite the expressions of magnanimity, insurers have already admitted storm-related claims would seriously impact financial results for 2005.

Kaido Tropp, a member of the Financial Supervision Authority's board, informed the Baltic News Service of insurance company managers' assurances that, while payments would not pose a threat to their financial situation, they would affect economic results for 2005.

"The insurance sector is not so profitable that it could pay out 150 million [kroons] and yet earn a huge profit. That's not realistic," Tropp said.

Insurers said the business was cyclical and major disasters were rare, he explained. Companies have for 10 years been amassing reserves that now enable them to compensate for the damage caused by the recent storm and flooding.

Tropp pointed out that the 150 million kroon estimate is preliminary. The companies have only had a few days to assess a caseload whose number equals the number of cases they would normally handle in two years. What's more, not all policy holders have had time to file their claims.

As for vehicles, it is not clear at this point whether they will have to be compensated for in full or can be restored, Tropp said.

Problems with damage compensation are compounded by the fact that less than one-third of households in Estonia have insurance policies.

In the first nine months of 2004, Estonia's insurance companies earned a net profit of 270 million kroons.