08/09/2017 World Business Report


08/09/2017

The latest business news with informed analysis from the world's financial centres.


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Now it's time for World Business Report.

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Harvey could overtake Katrina as America's costliest hurricane,

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but will Irma prove even more expensive?

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We look at the spiralling cost of extreme weather and who pays?

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The boss of Virgin Atlantic tells us how they're helping customers

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in the Caribbean and aiding the recovery effort.

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China's trade surplus with the US jumps in August.

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As you've been hearing, it's one of the strongest storms

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ever recorded and aside from the human cost of the disaster,

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experts warn it could also be one of the most expensive.

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Much depends on what happens when it reaches densely populated Miami

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but estimates range from $70 to $190 billion.

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The financial cost of this year's hurricane season is already

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There's no official figure yet for Hurricane Harvey,

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which caused severe flooding and displaced more than a million

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But some including the Governor of Texas are estimating costs

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it would put Harvey ahead of Hurricane Katrina in 2005,

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officially the costliest hurricane in US history.

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Katrina did damage of nearly $160 billion.

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Until this year, nothing had come close to Katrina,

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although Hurricane Sandy in 2012 caused more than $68 billion

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But it's clear the economic damage from extreme

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Since 1980, the US has experienced 212 major weather disasters

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with costs totalling $$1.2 trillion.

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So is climate change behind this spiralling bill?

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"One of the things we know about climate change

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is that a warmer atmosphere

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So that means when a hurricane does hit, more rain can come out of that

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hurricane and cause a lot more flooding.

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Another thing is that warmer oceans feed the hurricane,

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so a warmer ocean means stronger hurricanes.

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In this particular basin it's particularly hard to see a past

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event where so many hurricanes have occurred in such quick succession.

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It's not just the number of hurricanes, it's the magnitude.

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Bronek Masojada is Chief Executive of the Hiscox Insurance Group based

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Thank you for coming in. Those figures we were talking about, those

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are the total costs, when we talked about the costs the insurance

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companies will pay out, that will be a smaller figure, but even after

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that this is shaping up to be one of the most expensive years so far for

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the insurance industries? So far we have spent between $10 billion and

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$15 billion in Houston, it is much less than the actual cost because

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few people in America purchase flood insurance. The real cost is much

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higher. In terms of Irma, we expected to be a bigger cost. Most

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people buy insurance against wind damage and so the economic cost

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because of the insurance costs could be anywhere between $50 billion and

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100 $50 billion, so a bigger proportion of the total cost. Lots

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of people don't have insurance against flooding, white, our

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premiums too expensive? It's the way the industry has evolved. -- why.

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It's very seldom... Wins are more frequent than floods. It's available

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either from private insurers or National Insurance -- wins. Many

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people think it is too expensive. Many insurance companies did a dry

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run of many scenarios, a cyber attack, a hurricane hitting Miami,

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all within a two-week period to learn lessons about how to cope when

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seismic events like these come in quick succession. What lessons did

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you learn from that drive run and has it helped for you to prepare for

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the hurricane season -- dry run. The last big event was Katrina in 2005

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so we are out of practice. What the dry run made us realise is we need

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to update our contingency plans and actually last week after the floods

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in Houston we invoked that plan and it's really working. It's making us

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pay claims faster, it means we're getting muggy to the people who need

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it when they need it most quickly -- money. It's been incredibly helpful.

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Do you think the record claims we will see from this season will have

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an impact on the future of the insurance industry, our premiums

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going to rise or will people be unable to get insurance? -- are the

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premiums. I doubt people would be able to get insurance, this is why

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we are here, we expect to pay all these claims. Overtime will premiums

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go up? I expect we will see small to medium-sized increases -- over time.

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The exact impact will depend on exactly where Irma goes and into

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days, it will be the weekend before it hits the mainland Florida coast

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and the actual hurricane path makes a big difference. 100 miles to the

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east to west will make a big difference to the ultimate economic

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cost but this is a big one. Thanks for your time.

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We are also looking at the response of the airlines to Hurricane Irma.

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They're putting on extra flights to get tourists home from Florida

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and the Caribbean, but some are also starting to play

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The Chief Executive of Virgin Atlantic, Craig Kreeger,

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told the BBC's Theo Leggett how they are responding.

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We've already started with today's like taking water and blankets on

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with us. On tomorrow's flight we will take building materials and

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roofing materials -- today's flight. We anticipate this being a long

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rebuilding process and we are committed to the region. We've been

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encouraging customers in Florida to come back early and we might we will

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put an extra air plane on if we need to to help them get back on Friday

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instead of waiting until the weekend. If we need extra flights on

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Monday to take things there or bring people back then we will do so.

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These are situations that as an airline we have an important role to

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play, and no role we both recognise and take very seriously. How

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prepared are you for events like this? -- and a roll. With whether

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particularly we stand up a team that starts looking at the forecast and

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assessing whether we should change schedules and make adjustments for

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customers and offer them the capability to change bookings and we

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did that sometime ago this one and then obviously when it hits, we

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figure out what we can do to help. There have been reports from the

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United States about some airlines engaging in price gouging, lifting

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their prizes for people trying to get out of areas likely to be hit by

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the hurricane. How do you react to that? I'm not familiar with those

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reports -- prices. If they are not uncomfortable going to these

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destinations and they want to delay a month or so, we will do that

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without charge. These are difficult events and obviously it would be

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great for Virgin Atlantic but that's not the important part, the

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important part is for customers to be safe and for us to get our people

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and our customers where they need to get to. The chief executive of

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Virgin Atlantic. Let's go to Asia now

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and the controversy over China's trade imbalance with the US

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is likely to be rekindled. China runs a big trade

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surplus with the US, in other words it's selling more

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to US than it buys from it. The latest figures show that

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surplus widened in August. Sharanjit Leyl is following this

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for us in Singapore. Give us the figures. That's right,

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Rachel. The world's factory seems to be at it again and that massive

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trade surplus with the US came in at over $26 billion for the month of

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August. That's a rise from the previous month. Essentially taking

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the January to August numbers to about $168 billion, a whopping

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figure that's unlikely to make President Donald Trump too happy and

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it's going to raise trade tensions again I suppose. We know China's

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trade numbers for August also posted strong growth so we saw experts

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rising about 5.5% in US dollar terms, imports were up 13%. All of

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this seems to show China's trade performance seems to be something of

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a rebound this year after several lean years, that's really due to

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much stronger demand you're seeing at home over there in China as well

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as a broad, exports appear to be contributing to China's economic

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growth, it's re-establishing its role as the factory to the world and

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it's really gone back to a lot of its old ways with its very strong

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appetite for industrial commodities, the likes of iron ore and coal,

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which is really boosting resource prices worldwide as well. Sharanjit

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Leyl, thank you for that. The American credit rating giant

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Equifax says its computer systems have been hit by hackers potentially

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affecting 143 million The company says the hacking took

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place between May and July The hackers stole data

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including names, addresses Some British and Canadian accounts

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could also have been affected. Let's see how the markets have been

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getting on and Asian markets are still currently trading, they are a

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bit mixed, there they are, the Hang Seng up, the Nikkei down because the

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yen is still strong and the Nikkei is stuffed full of exporters were

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the strong yen makes their items more expensive for foreign

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companies. Let's look at Wall Street, it held steady yesterday,

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not a lot of movement. Waiting to see what happens with the

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hurricanes. That's it from me. Don't forget you can get in touch

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with me and some of the team

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