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tv   BBC Business Live  BBC News  September 8, 2017 8:30am-9:00am BST

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this is business live from bbc news with rachel horne and susannah streeter. insuring against nature — as hurricane irma continues to batter the caribbean the insurance industry braces for one of its most expensive years on record. live from london, that's our top story on friday the 8th of september. with irma on course to overtake katrina as america's costliest hurricane, we'll look at the spiralling cost of extreme weather — and who pays. also in the programme, the public relations disaster that just keeps spreading. bell pottinger‘s asia unit says it will separate from its british parent after its south africa controversy. the european markets have opened, not a huge amount of movement so far. many investors holding their
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breath to see the economic impact of the hurricane season. we'll be getting inside track on saudi arabia's plans to sell off oil operations. plus, after an estimated 143 million customers were affected by the massive equifax incident, we wa nt to by the massive equifax incident, we want to know how often you change your password. hello and welcome to business live. welcome to the programme. hurricane irma is continuing its path of destruction across the caribbean. the international red cross says that more than 1.2 million people have already been affected by one of the strong storms ever recorded. at least 14 people have died so far. and many more are expected to suffer as it continues heading towards the us — it's predicted to reach miami at the weekend. aside from the human cost
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of the disaster, experts warn it could also be one of the most expensive. much depends on its exact path when it reaches densely populated miami — but estimates range from $70 billion to 190 billion. let's show you the numbers involved. there's no official figure yet for hurricane harvey, which caused severe flooding and displaced more than a million people in texas last week. but some, including the governor of texas, are estimating costs of around $180 billion. if that figure is accurate, it would put harvey ahead of hurricane katrina in 2005 — officially the costliest hurricane in us history. katrina did damage of nearly £160 billion. until this year nothing had come close to katrina — although hurricane sandy in 2012 caused more than $68 billion in damage. but it's clear the economic damage from extreme weather is on the rise. since 1980 the us has experienced 212 major weather disasters with costs totalling $1.2 trillion.
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and the chief executive of hiscox insurance, bronek masojada, told me this year was on course to be one of the most expensive so far. in terms of irma, we expect it to be a far bigger expense in terms of wind. most people buy insurance against wind damage. so the economic cost, the insurance costs, could be anything between $50 billion and $150 billion, so a much bigger proportion of the total economic cost. david marrock is the chief executive of charles taylor insurance services — among other things they help the industry process claims. in the immediate aftermath, it's going to be emergency shelter and food that people will need. how quickly can insurance companies give them emergency funding so that they can survive? i think a lot of the initial emergency funding will
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actually come through fema, the government agencies. the insurance agencies will have to go out and assess the claims, assess if they are assess the claims, assess if they a re covered assess the claims, assess if they are covered and then they will stop providing funding. you say assess if they are covered, with flooding it isa they are covered, with flooding it is a grey area. lots of people don't ta ke is a grey area. lots of people don't take out specific flooding insurance, even though the flooding may have been caused by a hurricane, which they are insured against? essentially, if you look at texas, for example, the estimate is only 20% of household is actually have coverage for flood in 20% of household is actually have coverage forflood in place. that co m pa res coverage forflood in place. that compares to, if you go back to katrina, over half of people had flood damage cover in place. if the damage is caused by flood, the reality is that the insurers will say that is under your flood insurance. if you don't have flood insurance, those individuals will be looking at fema for emergency assistance and it will take quite some time. part of what charles
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taylor davis do is loss adjusting, getting onto the ground, assess the damage and what claim people can make. how quickly are you on the ground after incidents like this? we have offices in houston and florida. we have people on the ground, right now, ready to assess claims. i think the reality is that there are still a lot of areas that are inaccessible. we deal quite heavily on the commercial end of the world. in that space, people are still getting back to their offices and workplaces to assess what damage there is, and to start making those claims. we seem to have have an increasing number of extreme weather events. just today we had an earthquake in mexico. how does the insurance industry factor these in, in projections going forward, working out how much to charge customers? well, it is clearly one of the more difficult assessments to make because it is essentially a low probability event. when it happens,
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the costs are enormous. it's always a tough call, exactly how to rate that. they use models to help that assessment and they will have made a view about how many hurricanes, what sort of frequency and with what sort of cost. i think what we are seeing this year is that it will be above what people were expecting, to have two hurricanes of this scale and nature in such close proximity, it would be unexpected, if you like. briefly, do you think it means insurance premiums will go up?” think there is definitely the potential for that. when think there is definitely the potentialfor that. when insurers get surprised, that is typically the reaction. the caveat to that is that, at the moment, the market is awash with capital. there is always the potential that money will flow backin the potential that money will flow back in two, if you like, put capital back into those insurers and rates will end up staying the same. wait and see? overall, we would
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expect rates to go up. thank you for talking to us. let's take a look at some of the other stories making the news. the credit rating giant equifax says its computer systems have been hit by hackers. it means more than 140 million customers across the united states may have had data compromised which includes addresses and social security numbers. the company said its main credit rating databases weren't affected. the world's biggest internet retailer amazon has announced plans to build a second headquarters in north america. it's sparked fierce competition from cities including toronto, texas and chicago who are all keen to attract the $5 billion investment the company is promising. the new centre will support at least 50,000 jobs. chinese imports grew slower than expected in august, hit by weak global demand, but a jump in imports indicate domestic growth. exports only picked up by 5.5%. it's been a terrible week for the british public relations
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firm bell pottinger. it was kicked out of its industry body after being accused of stirring up racial hatred in south africa and now as it nears collapse it's asian unit is planning to go it alone. it's based in singapore and monica miller is there for us. what have you discovered? yes, the asian firm's unit wasted little time to rebrand itself and get some distance from the london based parent. it plans to relaunch its business with a new ownership structure. it will operate under a new name, clerical communications. it comes after bell pottinger was expeued it comes after bell pottinger was expelled from the industry trade body after being accused of stirring up body after being accused of stirring up racial tensions in south africa. big—name companies like hsbc have already cut ties with the british public relations firm since the scandal broke. here in asia it story. revenues have been growing at a steady pace in recent years. they have established offices in hong
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kong, asia, me and it says the operations are solvent and it is business as usual. stocks in asia mixed — the nikkei has been kept down by a strong yen. the japanese stock market is stuffed full of exporters so a strong yen makes their items more expensive for foreign buyers — that pushes down the value of the companies and by extension, the stock market. you can see the numbers, down 0.63%. the dollar is holding onto current price, investors holding their breath for the aftermath of hurricane irma. no huge movements in europe. familiar issues at play, a strong euro, a weaker pound. the strength of the euro consolidated by the ecb meeting where they revised
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growth forecasts high and indicated they had started to talk about papering. no firm details yet. let's go to somebody with details, samira hussein is on wall street. us supermarket operator kroger will be reporting earnings on friday and it's expected to show an increase to profits for the second quarter. that's because of investments in categories like milk and eggs. the supermarket wars are really heating up in america, as many big us retailers are putting more deficits of groceries. walmart has been investing heavily in its groceries division, including and of course, the big and wholefoods market. also happening on friday, we'll get numbers for sales at us wholesalers. that likely went up by 0.4% in the month ofjuly. that's after a 0.7% increase back in june. the federal reserve will be
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releasing the latest consumer credit numbers. now, the availability of credit supports purchasing big—ticket items like cars and appliances, which is all part of the highly important consumer spending for the united states. joining us is mike amey, managing director and portfolio manager at pimco. hello. let's talk about insurers. what magem hello. let's talk about insurers. what fisggefiefi to i hello. let's talk about insurers. what. fié’éééfiéfi to their share what has happened to their share prices, the ripping the caribbean? you §ejtti a you hi") at—~~r= ,, 'a' " " whole, if you look at the main insurance indices, they are down 2% of 3% over the last couple of days, about 10% on the peek at the beginning of august. that year to date, flat or slightly up. there are some that have done worse than that, but, generally speaking, as you were saying earlier, the market has taken it relatively well. they had a very, very good years before this. they've got a lot of capital? yes, that is what the markets are focused on. you have the hit two innings this year, but it is not an event that is
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putting serious pressure on the insurance industry. let's talk about the ecb, the big meeting that happened yesterday. what headlines came out of it? the ecb is still spending money. it is one of the few central banks trying to put more money into the economy. the european economy is doing quite well as a result. it will grow stronger than the uk for the next couple of years. there is a question mark as to when they are going to i doing 15 p i— it,butnot — —— —— ,
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