Risk modeller AIR Worldwide have issued an updated estimate for the amount of insured losses they expect the industry to see from the Japanese earthquake and tsunami on the 11th March. Their initial estimate was for a range of $14.5 billion to $34.6 billion excluding losses from the tsunami, which they said would take more time to model.
Their latest insured loss estimate, which now includes expected losses from the tsunami, is a range of between $20 billion and $30 billion. This new estimate avoids double counting losses in the affected areas, which was a problem as many buildings damaged by the earthquake were then destroyed or damaged further by the tsunami.
The loss estimate is composed of between $11 billion to $21 billion for ground shaking and fire-following from the earthquake, with tsunami losses of between $8 billion and $9.7 billion. The estimates include losses for the Japan Earthquake Reinsurance Co., Ltd. (JER) and is net of government recoveries.
However, the eventual total insured loss that re/insurers will be liable for could be much bigger as these estimates from AIR Worldwide do not include losses due to direct business interruption, landslide, automobiles, land, casualty and life, infrastructure, indirect business interruption, loss adjustment expenses and demand surge. Of those items the one that many observers say could become a sizeable loss is contingent business interruption to businesses and industries in Japan (and elsewhere that rely on Japanese businesses).
The full report can be found here.