08/09/2017 BBC Business Live


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This is Business Live from BBC News with Rachel Horne


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


With Irma on course to overtake Katrina as America's


costliest hurricane, we'll look at the spiralling cost


Also in the programme, the public relations disaster that


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 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


want to know how often you change your password.


Hurricane Irma is continuing its path of destruction


The International Red Cross says that more than 1.2 million people


have already been affected by one of the strong storms ever recorded.


And many more are expected to suffer as it continues


heading towards the US - it's predicted to reach


Aside from the human cost 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


There's no official figure yet for Hurricane Harvey,


which caused severe flooding and displaced more than a million


But some, including the Governor of Texas, are estimating costs


If that figure is accurate, it would put Harvey ahead


of Hurricane Katrina in 2005 - officially the costliest


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


But it's clear the economic damage from extreme weather is on the rise.


Since 1980 the US has experienced 212 major weather disasters


And the Chief Executive of Hiscox insurance, Bronek Masojada,


told me this year was on course to be one of the most


In terms of Irma, we expect it to be a far bigger


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 actually come through FEMA, the


government agencies. The insurance agencies will have to go out and


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


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 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


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, 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? I think there is definitely the


potential for 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


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


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


It means more than 140 million customers across the United States


may have had data compromised which includes addresses


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 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


It's been a terrible week for the British public relations


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 expelled from the industry trade


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 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


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,


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 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


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 tie-up between Amazon


Also happening on Friday, we'll get numbers for sales at US wholesalers.


That likely went up by 0.4% in the month of July.


That's after a 0.7% increase back in June.


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


Hello. Let's talk about insurers. What has happened to their share


prices, given the hurricane ripping through the Caribbean? So far, so


good. The insurance sector as 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


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 stop doing that. That is the focus. What Mario Draghi


said to us yesterday, the President of the central bank, is that he is


thinking about it, but not yet. He did mention the timing going


forward? At the moment they are still spending money, most


expectations are that they will slow down the cash spend next year. It is


how quickly he is going to admit his own to do that. That is one of the


focuses for yesterday. He said, I'm thinking about it, rather than it is


a done deal and I'm going to do it starting next month. Still an issue


with inflation? The UK is one of the few places with inflation above


target. The US has inflation below target. The Europeans, the forecast


for 2019 is still only 1.5% inflation. This is the challenge


that we have, trying to get growth up, wages up. If you get wages up,


hopefully we'll get inflation as well. Many thanks, you will be


coming back later to talk through some of the stories making the


papers. Our business editor Simon Jack


will be here to talk about migration after Brexit and the latest


on Saudi Arabia's plans to sell Lots of MPs are concerned about


that. You're with Business


Live from BBC News. There could be some very good news


for those looking for jobs, at least that's according


to the latest Recruitment and The REC has found that demand


for staff has increased at the fastest rate since April


2015, resulting in an And with candidate availability


continuing to decline, pay rates are being pushed


higher than ever. Tom Hadley, REC's Director


of Policy and Professional Welcome to the programme. Can you


give us an outline, what sort of jobs are we talking about? It cuts


across, and what is interesting is the whole Brexit debate, in some


ways, is creating some new jobs. There's a big demand for managerial,


leadership roles to help companies navigate these uncertain waters.


Also things like risk managers, legal staff, HR staff. There is huge


demand there. Also big demand in sectors like the blue collar


sectors, hospitality being one, logistics, construction. It cuts


across most sectors of the economy. We talked about a lack of


availability of candidates. Why are we seeing this? Anything to do with


Brexit? To some extent, the demand for engineering and IT has been


strong for many years, that predates Brexit, although it is getting


harder. Some sectors like blue-collar, hospitality, there is


no doubt it is getting tougher. Month on month, professionals are


telling us we are making more placements, demand for staff is


increasing, how are we going to fill that supply? Our members are working


very hard to meet the demand. The challenge ahead is if the hammer


does come down on immigration policy, how are we going to be able


to meet that demand from employers? That is one of our messages to


government. We need a progressive immigration policy to meet the


demand for staff. Very briefly, how are the pay rates being pushed high?


We keep hearing that pay is not matching inflation and wage growth


is slowing. Is it lack of available candidates? Yes, we track starting


salaries. Because it is hard to find of candidates to fill the roles,


employers are having to put more cash in to attract people to


companies. It's not just cash, a lot of companies are looking differently


at how they hire, can we get people with less experience and build them


up, can we have a printer ships? This is happening while we need to


impress the need for progressive immigration policies in the short


term. Becky. We will be talking about immigration


a little later with Simon Jack, our business editor. You are watching


Business Live. Our top story is about Hurricane Irma and the impact


it is having on the insurance market.


A quick look at how markets are faring...


Europe has been open for about 45 minutes. A lot of investors waiting


to see what impact the hurricane is going to have on the markets.


And now let's get the inside track on this week's big economics stories


with the BBC's business editor Simon Jack.


What is concentrating minds in the city is the flotation of part of the


Saudi Arabian oil industry. There are MPs who are not very happy with


the way this deal has progressed. All the financial centres in the


world love premium listings - the bring jobs, fee revenue, prestige.


This is the place you come to raise money. New York, Hong Kong, London,


or would like this because it would be a super premium listing. It will


be worth double the amount of Apple, around $2 trillion, to give some


perspective. The prestige question is interesting. Because it is 95%


owned by the Saudi Arabian Government, its revenue generation


machine, you would only have 5% available for the public to buy, and


our concerns that smaller shareholders' interests wouldn't be


look after. There are strict rules about that. Recently, Theresa May


and the head of the London stock exchange went to Riyadh to talk to


them, obviously to say, why don't you come to London? Hey presto, a


little later, the financial watchdog said it was considering consulting


on loosening the rules. They didn't mention Saudi Arabia or Aramco, but


everyone knew what they meant. There were loosening the rules to make it


easier for Aramco to list here. The question is, should you do that and


weaken the standards to get them here, and others are saying, get


real. That is one of the big reasons why the FTSE are going after it. But


what other stock exchanges are in the race? New York and London are


probably the leading candidates. You are right when you talk about


Brexit, because there are those who think that after Brexit, some


operations will move out of London and it may lose its prestige. Are we


seeing this loosening as getting this premium bitter business as a


counterweight to some loss of influencing global markets? Some


people would say we don't need to that. On Brexit, there was this


leaked immigration report. You have been looking into this, and it has


sent a bit of a chill through the business community, hasn't it?


Basically, some sectors are very reliant on large numbers of EU


migrants, such as the hospitality industry. Their trade body said that


clamping down on low skilled work in particular would be catastrophic.


That was the word they used. Construction is well. Businesses


have had the luxury of having almost limitless supplies of labour from


the EU. Some people think that has pushed down working conditions and


wages here in the UK, and the Government has been trying to walk


this tightrope between looking after the concerns of voters on that and


also the needs of business. People think that with this leaked report


saying they would come down much harder than people thought, they are


murdering two is -- they are leaning too hard on the side of voters.


Everybody thinks that migration brings down wages. There has been a


lot of research done, and at the lower end, there is some evidence of


a small reduction in wages in some industries, but generally, it


doesn't mean that. Unemployment is 4.4%, almost full employment in


economic terms. There that many spare UK workers around to up, and


there is a recruitment and employment Federation report saying,


we're beginning to feel the pinch and wages will have to start going


up. The Bank of England will look at that. If wages go up, good - if


prices go up, not so good. The Bank of England will be watching those


numbers incredibly closely. Many in the hospitality industry trying to


recruit those staff would say, they are skilled, the waiters and the


chefs. The definition of skilled and unskilled is a Bay Area, probably


the subject for another programme. Thank you, Simon.


Aaron has been munching his way through TV dinners in our latest


million-dollar idea. Precooked, frozen meals in a tray -


and we love them. The idea started


with in-flight meals. They first took


to the skies in 1945. But the packaged


dinner to eat at home Picture the scene -


it's Thanksgiving, the US food company Swanson has


a problem - it is stuck with 260 Well, someone in the company


had a bright idea. Turn them into ready meals


with all the trimmings, using the same metal


trays as the airlines, and they hit on the brand


name TV dinners. Swanson sold 10 million


in the first year alone. Well, TV was the new craze in


America at the time, and the packets were designed to look like TV sets,


with the food on the screen. Whatever it was, these


little babies have taken off, with ready meals


as we call them today now worth more


than $100 billion every single year. I wonder if there is anyone watching


this eating a TV dinner, or a TV breakfast.


What other business stories has the media been


Mike Amey is joining us again to discuss.


We were discussing passwords earlier, asking people how much they


change them - what about you? Do you change that enough? There has been


this huge data breach. In all honesty, I probably don't. If our


chief technology officer is watching, then I do regularly change


it, but I don't think any of us do, really. The challenge, of course,


is, if you keep changing it, you have to remember them all. And then


you end up writing them down. The key thing is to monitor your


accounts to make sure there isn't any kind of payment that you didn't


expect to be going up. Exactly. As long as you keep a close eye on


it... If you see any unusual factors, just change them


immediately. Think a lot of the reason why people are lax about


changing passwords it's because we have this feeling that whatever


happens we'll be compensated, we'll get the money back. It's not really


going to have an impact on us apart from inconvenience. At some point,


that's going to change. 143 million accounts have been compromised, so


huge numbers of people compromised on that particular one. The risk we


have is that we think it is somebody else's responsibility for us to keep


our own online security. Ultimately, it is our responsibility as much as


anyone else's. Another story making the papers is about how Poland could


end up scuppering the EU- Canada trade deal. This is all about when


there is a conflict and there has to be a resolution to a trade conflict,


isn't it? Very interesting to people like me. The interesting thing about


it is, with any Trego, if you have a disagreement between the two


parties, somebody has to be the judge, and typically... -- with any


trade deal, if you have a disagreement... Poland have the


ability to scupper the deal if they want to. An important one to watch,


this one. And it shows how difficult trade deals can be. We thought it


was a done deal, but it could be unwound. Indeed. Mike, thank you for


joining us. There will be more business news


throughout the day on the BBC Live webpage and on World Business


Report. Good morning. The weather will


remain unsettled through today


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