Insurance payouts for damage to dwellings after the Kumamoto region of Kyushu, Japan earthquakes in April from both Japanese domestic and foreign non-life insurers have now reached over $2.2 billion, up another 35% in a week.
As the total loss to insurers keeps rising, based on claims paid information from the General Insurance Association of Japan (GIAJ), the amount likely to fall to reinsurance markets to pay for is also increasing.
The now $2.2 billion of insurance claims paid means that roughly 72% of the inquiries raised with insurers are settled. With 30% of inquiries still to be settled and any payments made, it seems likely this figure will rise to above $2.5 billion before all claims inquiries have been dealt with.
As a result the the burden for insurance firms, and ultimately for reinsurance companies and any exposed ILS funds or ILS investors, will rise further.
Two weeks ago claims payouts from the Kumamoto earthquakes had passed $1.13 billion, making the event the second largest insurance payout from a quake in Japanese history, after the 2011 Tohoku quake.
That claims paid total then rose by 46% in just one week, reaching $1.65 billion of insurance claims paid by the 23rd May 2016.
Now, the insurance industry loss has risen further by another 35% in the past week, reaching roughly $2.2 billion by the 30th May 2016, according to the GIAJ.
It should be noted that this insurance claims paid figure from the GIAJ remains solely for damage to dwellings, so not including damage to commercial or industrial property, infrastructure related losses, agricultural industry damage, or indeed business interruption.
As we wrote recently, the Japanese government estimated the total economic loss from the Kumamoto earthquakes to be up to $42 billion and business interruption claims are coming in, both of which suggest that providers of insurance and reinsurance capital will see the eventual total industry loss rise further.
The insurance claims paid figure from the GIAJ is now well above RMS’ insurance industry loss estimate of up to $1.2 billion, now validates Aon Benfield’s estimate that the loss would pass $2 billion and sits within AIR Worldwide’s $1.7 billion to $2.9 billion (excluding business interruption) estimate.
With the dwelling loss now at $2.2 billion the total insurance and reinsurance industry exposure to this event looks set to near the top-end or even surpass all the estimates, when the final total is tallied up.
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