Risk modeller EQECAT have issued an update to their estimate of the insured loss due to the Tohoku earthquake which struck Japan on the 11th March causing massive damage from the widespread shaking and tsunami that followed. Now, almost two months after the earthquake, they have had time to gather data and perform greater analysis on the event and the loss data which has emerged and have raised their estimate to account for the scale of the damage.
EQECAT initially put the loss that the re/insurance market would be liable for at between $12 billion and $25 billion. Now they have increased their estimate to between $22 billion and $39 billion. That’s quite an increase.
EQECAT say the increase is due to a number of factors, including; the damage caused by water levels brought onshore by the tsunami (initially reported to be 8 metres), insight gained on damage from liquefaction, damage caused by landslides, disruption to electricity and transportation and amplification of losses caused by the disruption at the striken nuclear power station at Fukushima.
Property insurers will bear the brunt of the losses (from $15 billion to $25 billion) with other affected lines of business being marine, auto, life, and personal accident.Their estimate includes an allowance for demand surge, inflation of damages often seen after a major disaster but does not include contingent business interruption losses which they say is hard to quantify.
It’s worth reading the full report that EQECAT have published today as it provides a huge amount of insight into the disaster in Japan. You can access it through their CatWatch service here.