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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