By Myles Neligan
LONDON (Reuters) - The Lloyd's of London insurance market predicted a $3.8 billion hit from earthquakes and floods in the first quarter, and said those disasters and recent U.S. tornadoes should help boost insurance prices.
The loss estimate included $1.95 billion from the earthquake that devastated Japan in March, with the February New Zealand quake accounting for $1.2 billion, and flooding in Australia costing a projected $650 million.
The estimate was well within worst case scenarios Lloyd's prepares for, and the market will have no difficulty paying claims, it said on Friday.
"As ever, our priority remains to assess and settle valid claims as swiftly as we can to help these communities get back on their feet," chief executive Richard Ward said.
Ward said the natural disasters in the first quarter, including tornadoes that swept through southern U.S. states in April, should lead to a "firming of rates" as insurers seek to recoup big payouts to customers.
Big natural disasters can drive a rise in insurance prices as claims eat into the industry's capital reserves, forcing less well-funded players to retrench and freeing those still in the market to charge more.
Insurers have said the earthquakes and floods in the first quarter have boosted the cost of certain types of insurance, but that pricing in the broader market remains flat.
Lloyd's said its own capital reserves would be unaffected, and that there would be no need to call on its central fund -- a financial safety net used in the event of a Lloyd's syndicate being unable to pay claims.
Lloyd's projected $1.9 billion hit from the Japanese earthquake is based on a total insured loss of $30 billion, toward the upper end of estimates calculated by risk modeling agencies, which range from $20 billion to $34 billion. (Editing by Sophie Walker)
