Insurance claims arising from the massive tremor that struck Japan on 28 July could exceed the average JPY175bn ($1.1bn) recorded for the country's previous six major earthquakes.
This is according to estimates from Bloomberg Intelligence (BI), with analyst Steven Lam saying industry-wide insurance claims are expected to reach the low hundreds of billions of yen. The majority of the exposure is tied to commercial properties and residential policies covered under Japan’s earthquake insurance system.
Japan’s three largest private insurers—Tokio Marine Holdings, Sompo Holdings and MS&AD Insurance Group Holdings—have collectively budgeted JPY365bn for domestic natural catastrophe claims in the current fiscal year, more than double the combined claims recorded in the previous year. Despite the expected increase in claims, Bloomberg Intelligence estimates that the insurers’ share of losses from the latest earthquake would amount to less than 1% of adjusted profit after reinsurance recoveries and taxes.
Around 30 people have died and widespread damage has been reported following the magnitude 7.1 earthquake that struck Kumamoto earlier this week. Some fatalities are still being assessed for links to the quake. Bloomberg Intelligence noted that while the earthquake is likely to generate claims above the historical average for major earthquakes in Japan, the country’s leading insurers have already strengthened their catastrophe reserves.