Japan earthquake losses may reach $5 billion: Verisk

Insured property losses from the 7.3 magnitude earthquake that hit Japan earlier this month are expected to reach between 240-490 billion yen ($2.6-5.4 billion), Verisk Extreme Event Solutions estimates.

Early reports suggest more than 580 buildings in Fukushima Prefecture and more than 570 buildings in Miyagi Prefecture were damaged by the March 16 quake, which struck offshore Japan’s main island of Honshu.

Other impacts from the quake include power and water outages, damage to highways, rail lines, viaducts, and other infrastructure, short-term cancellation of some train service and significant supply chain and production interruption for the automotive and paper industries.

The Verisk damage estimate includes 50-100 billion yen ($553 million-$1.1 billion) that can be attributed to commercial and industrial properties.

The earthquake, which was located about 100km from the epicentre of the 2011 magnitude 9.0 Tohoku earthquake, was preceded by a 6.4 magnitude foreshock about two minutes earlier.

Fitch Ratings says in a report on Japanese non-life insurers that March earthquake losses are likely to have only a minor impact on earnings.

Tokio Marine, MS&AD Insurance Group and Sompo have diverse portfolios and earthquakes have been a relatively small underwriting risk, the firm says.

Japanese households’ earthquake risk is managed by the government, with low net retention by private insurers, while their net exposure to corporate earthquake risk is also small, as the insurers have largely transferred the exposure to major European and US reinsurers to limit their retention.

Likewise, Japanese non-life insurers’ exposure to business interruption risk from the events remains limited, Fitch says.

Fitch estimates that the aggregate net insured loss from the earthquake is around 15-30 billion yen ($166-331 million), about the same amount as the 7.3 magnitude earthquake in north eastern Japan on February 13 last year.