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Now it's time for World Business Report. | :00:00. | :00:16. | |
Harvey could overtake Katrina as America's costliest hurricane, | :00:17. | :00:20. | |
but will Irma prove even more expensive? | :00:21. | :00:24. | |
We look at the spiralling cost of extreme weather and who pays? | :00:25. | :00:28. | |
The boss of Virgin Atlantic tells us how they're helping customers | :00:29. | :00:32. | |
in the Caribbean and aiding the recovery effort. | :00:33. | :00:39. | |
China's trade surplus with the US jumps in August. | :00:40. | :00:47. | |
As you've been hearing, it's one of the strongest storms | :00:48. | :00:56. | |
ever recorded and aside from the human cost of the disaster, | :00:57. | :00:59. | |
experts warn it could also be one of the most expensive. | :01:00. | :01:04. | |
Much depends on what happens when it reaches densely populated Miami | :01:05. | :01:07. | |
but estimates range from $70 to $190 billion. | :01:08. | :01:12. | |
The financial cost of this year's hurricane season is already | :01:13. | :01:15. | |
There's no official figure yet for Hurricane Harvey, | :01:16. | :01:27. | |
which caused severe flooding and displaced more than a million | :01:28. | :01:29. | |
But some including the Governor of Texas are estimating costs | :01:30. | :01:42. | |
it would put Harvey ahead of Hurricane Katrina in 2005, | :01:43. | :01:47. | |
officially the costliest hurricane in US history. | :01:48. | :01:49. | |
Katrina did damage of nearly $160 billion. | :01:50. | :01:51. | |
Until this year, nothing had come close to Katrina, | :01:52. | :01:53. | |
although Hurricane Sandy in 2012 caused more than $68 billion | :01:54. | :01:56. | |
But it's clear the economic damage from extreme | :01:57. | :02:07. | |
Since 1980, the US has experienced 212 major weather disasters | :02:08. | :02:11. | |
with costs totalling $$1.2 trillion. | :02:12. | :02:12. | |
So is climate change behind this spiralling bill? | :02:13. | :02:18. | |
"One of the things we know about climate change | :02:19. | :02:20. | |
is that a warmer atmosphere | :02:21. | :02:21. | |
So that means when a hurricane does hit, more rain can come out of that | :02:22. | :02:29. | |
hurricane and cause a lot more flooding. | :02:30. | :02:31. | |
Another thing is that warmer oceans feed the hurricane, | :02:32. | :02:45. | |
so a warmer ocean means stronger hurricanes. | :02:46. | :02:48. | |
In this particular basin it's particularly hard to see a past | :02:49. | :02:51. | |
event where so many hurricanes have occurred in such quick succession. | :02:52. | :02:54. | |
It's not just the number of hurricanes, it's the magnitude. | :02:55. | :02:56. | |
Bronek Masojada is Chief Executive of the Hiscox Insurance Group based | :02:57. | :03:00. | |
Thank you for coming in. Those figures we were talking about, those | :03:01. | :03:11. | |
are the total costs, when we talked about the costs the insurance | :03:12. | :03:15. | |
companies will pay out, that will be a smaller figure, but even after | :03:16. | :03:19. | |
that this is shaping up to be one of the most expensive years so far for | :03:20. | :03:25. | |
the insurance industries? So far we have spent between $10 billion and | :03:26. | :03:30. | |
$15 billion in Houston, it is much less than the actual cost because | :03:31. | :03:37. | |
few people in America purchase flood insurance. The real cost is much | :03:38. | :03:42. | |
higher. In terms of Irma, we expected to be a bigger cost. Most | :03:43. | :03:47. | |
people buy insurance against wind damage and so the economic cost | :03:48. | :03:51. | |
because of the insurance costs could be anywhere between $50 billion and | :03:52. | :03:55. | |
100 $50 billion, so a bigger proportion of the total cost. Lots | :03:56. | :03:59. | |
of people don't have insurance against flooding, white, our | :04:00. | :04:03. | |
premiums too expensive? It's the way the industry has evolved. -- why. | :04:04. | :04:11. | |
It's very seldom... Wins are more frequent than floods. It's available | :04:12. | :04:17. | |
either from private insurers or National Insurance -- wins. Many | :04:18. | :04:26. | |
people think it is too expensive. Many insurance companies did a dry | :04:27. | :04:31. | |
run of many scenarios, a cyber attack, a hurricane hitting Miami, | :04:32. | :04:36. | |
all within a two-week period to learn lessons about how to cope when | :04:37. | :04:42. | |
seismic events like these come in quick succession. What lessons did | :04:43. | :04:45. | |
you learn from that drive run and has it helped for you to prepare for | :04:46. | :04:51. | |
the hurricane season -- dry run. The last big event was Katrina in 2005 | :04:52. | :04:55. | |
so we are out of practice. What the dry run made us realise is we need | :04:56. | :05:00. | |
to update our contingency plans and actually last week after the floods | :05:01. | :05:05. | |
in Houston we invoked that plan and it's really working. It's making us | :05:06. | :05:10. | |
pay claims faster, it means we're getting muggy to the people who need | :05:11. | :05:15. | |
it when they need it most quickly -- money. It's been incredibly helpful. | :05:16. | :05:20. | |
Do you think the record claims we will see from this season will have | :05:21. | :05:24. | |
an impact on the future of the insurance industry, our premiums | :05:25. | :05:27. | |
going to rise or will people be unable to get insurance? -- are the | :05:28. | :05:33. | |
premiums. I doubt people would be able to get insurance, this is why | :05:34. | :05:37. | |
we are here, we expect to pay all these claims. Overtime will premiums | :05:38. | :05:43. | |
go up? I expect we will see small to medium-sized increases -- over time. | :05:44. | :05:48. | |
The exact impact will depend on exactly where Irma goes and into | :05:49. | :05:52. | |
days, it will be the weekend before it hits the mainland Florida coast | :05:53. | :05:56. | |
and the actual hurricane path makes a big difference. 100 miles to the | :05:57. | :06:00. | |
east to west will make a big difference to the ultimate economic | :06:01. | :06:04. | |
cost but this is a big one. Thanks for your time. | :06:05. | :06:05. | |
We are also looking at the response of the airlines to Hurricane Irma. | :06:06. | :06:09. | |
They're putting on extra flights to get tourists home from Florida | :06:10. | :06:12. | |
and the Caribbean, but some are also starting to play | :06:13. | :06:15. | |
The Chief Executive of Virgin Atlantic, Craig Kreeger, | :06:16. | :06:18. | |
told the BBC's Theo Leggett how they are responding. | :06:19. | :06:23. | |
We've already started with today's like taking water and blankets on | :06:24. | :06:32. | |
with us. On tomorrow's flight we will take building materials and | :06:33. | :06:35. | |
roofing materials -- today's flight. We anticipate this being a long | :06:36. | :06:39. | |
rebuilding process and we are committed to the region. We've been | :06:40. | :06:43. | |
encouraging customers in Florida to come back early and we might we will | :06:44. | :06:48. | |
put an extra air plane on if we need to to help them get back on Friday | :06:49. | :06:51. | |
instead of waiting until the weekend. If we need extra flights on | :06:52. | :06:55. | |
Monday to take things there or bring people back then we will do so. | :06:56. | :06:59. | |
These are situations that as an airline we have an important role to | :07:00. | :07:04. | |
play, and no role we both recognise and take very seriously. How | :07:05. | :07:08. | |
prepared are you for events like this? -- and a roll. With whether | :07:09. | :07:13. | |
particularly we stand up a team that starts looking at the forecast and | :07:14. | :07:17. | |
assessing whether we should change schedules and make adjustments for | :07:18. | :07:20. | |
customers and offer them the capability to change bookings and we | :07:21. | :07:24. | |
did that sometime ago this one and then obviously when it hits, we | :07:25. | :07:29. | |
figure out what we can do to help. There have been reports from the | :07:30. | :07:33. | |
United States about some airlines engaging in price gouging, lifting | :07:34. | :07:36. | |
their prizes for people trying to get out of areas likely to be hit by | :07:37. | :07:41. | |
the hurricane. How do you react to that? I'm not familiar with those | :07:42. | :07:47. | |
reports -- prices. If they are not uncomfortable going to these | :07:48. | :07:51. | |
destinations and they want to delay a month or so, we will do that | :07:52. | :07:56. | |
without charge. These are difficult events and obviously it would be | :07:57. | :07:59. | |
great for Virgin Atlantic but that's not the important part, the | :08:00. | :08:02. | |
important part is for customers to be safe and for us to get our people | :08:03. | :08:06. | |
and our customers where they need to get to. The chief executive of | :08:07. | :08:08. | |
Virgin Atlantic. Let's go to Asia now | :08:09. | :08:10. | |
and the controversy over China's trade imbalance with the US | :08:11. | :08:13. | |
is likely to be rekindled. China runs a big trade | :08:14. | :08:15. | |
surplus with the US, in other words it's selling more | :08:16. | :08:18. | |
to US than it buys from it. The latest figures show that | :08:19. | :08:21. | |
surplus widened in August. Sharanjit Leyl is following this | :08:22. | :08:26. | |
for us in Singapore. Give us the figures. That's right, | :08:27. | :08:34. | |
Rachel. The world's factory seems to be at it again and that massive | :08:35. | :08:39. | |
trade surplus with the US came in at over $26 billion for the month of | :08:40. | :08:43. | |
August. That's a rise from the previous month. Essentially taking | :08:44. | :08:47. | |
the January to August numbers to about $168 billion, a whopping | :08:48. | :08:52. | |
figure that's unlikely to make President Donald Trump too happy and | :08:53. | :08:56. | |
it's going to raise trade tensions again I suppose. We know China's | :08:57. | :09:01. | |
trade numbers for August also posted strong growth so we saw experts | :09:02. | :09:06. | |
rising about 5.5% in US dollar terms, imports were up 13%. All of | :09:07. | :09:11. | |
this seems to show China's trade performance seems to be something of | :09:12. | :09:16. | |
a rebound this year after several lean years, that's really due to | :09:17. | :09:20. | |
much stronger demand you're seeing at home over there in China as well | :09:21. | :09:25. | |
as a broad, exports appear to be contributing to China's economic | :09:26. | :09:28. | |
growth, it's re-establishing its role as the factory to the world and | :09:29. | :09:32. | |
it's really gone back to a lot of its old ways with its very strong | :09:33. | :09:35. | |
appetite for industrial commodities, the likes of iron ore and coal, | :09:36. | :09:43. | |
which is really boosting resource prices worldwide as well. Sharanjit | :09:44. | :09:44. | |
Leyl, thank you for that. The American credit rating giant | :09:45. | :09:50. | |
Equifax says its computer systems have been hit by hackers potentially | :09:51. | :09:54. | |
affecting 143 million The company says the hacking took | :09:55. | :09:56. | |
place between May and July The hackers stole data | :09:57. | :10:00. | |
including names, addresses Some British and Canadian accounts | :10:01. | :10:03. | |
could also have been affected. Let's see how the markets have been | :10:04. | :10:12. | |
getting on and Asian markets are still currently trading, they are a | :10:13. | :10:16. | |
bit mixed, there they are, the Hang Seng up, the Nikkei down because the | :10:17. | :10:20. | |
yen is still strong and the Nikkei is stuffed full of exporters were | :10:21. | :10:24. | |
the strong yen makes their items more expensive for foreign | :10:25. | :10:30. | |
companies. Let's look at Wall Street, it held steady yesterday, | :10:31. | :10:34. | |
not a lot of movement. Waiting to see what happens with the | :10:35. | :10:36. | |
hurricanes. That's it from me. Don't forget you can get in touch | :10:37. | :10:37. | |
with me and some of the team | :10:38. | :10:42. |