Kumamoto, Japan quake insurance payouts rise 46% to $1.65bn

Insurance payouts from both Japanese domestic and foreign non-life companies for damage to dwellings after the Kumamoto region of Kyushu, Japan earthquakes in April have risen by 46% in a week to $1.65 billion.

The $1.65 billion of insurance claims paid reflects the settlement and claims payment of 59% of the inquiries raised with insurers so far, according to the General Insurance Association of Japan (GIAJ), suggesting that the total has further to rise, raising the burden for insurance firms and ultimately for reinsurance companies and any exposed ILS funds or ILS investors.

As we wrote last week, 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 figure had risen by 46% in just one week, reaching $1.65 billion of insurance claims paid by the 23rd May 2016.

The GIAJ now reports that 188,319 claims inquiries have been, up over 17,000 in the last week. Of those 122,849 are now cases that have been settled (up about 38,000 in a week showing that cases are being dealt with rapidly) and 111,463 have resulted in an insurance claim payment (up almost 35,000 in the week).

The total cost to the insurance and reinsurance industry from claims paid due to damage of dwellings has now reached almost JPY 181 billion, which is roughly US$1.65 billion.

So the insurance and reinsurance industry loss is now rising fast, as claims from the earthquake get settled quickly in the Kumamoto region. However with just 59% of the raised claims inquiries paid, the figure is sure to rise with $2 billion clearly within sight.

And this is just for damage to dwellings, so not including damage to commercial or industrial property, infrastructure related losses, agricultural industry damage, or indeed business interruption, which suggests that providers of insurance and reinsurance capital could see the eventual total industry loss rise further.

The total reported by the GIAJ is now well beyond RMS’ up to $1.2 billion insurance industry loss estimate, rapidly approaching Aon Benfield’s estimate that the loss would pass $2 billion and almost within AIR Worldwide’s $1.7 billion to $2.9 billion (excluding business interruption) estimate.

With the claims payments made by insurers for dwelling (so residential) property losses now at $1.65 billion and rising, the total industry loss continues to increase. How much international insurance and reinsurance markets, as well as Japanese domestic insurers, will pay for claims on commercial risks and items such as business interruption remains to be seen, but the total impact to re/insurance capital is certainly looking to be towards the higher side of current estimates.

It could be some time before we understand the true extent of this loss and what level of loss impact will be felt by reinsurance markets, ILS funds and any exposed reinsurance sidecar vehicles.

Also read:

– Kumamoto quake insurance payouts pass $1.13bn, more to come.

– Japan quake insured loss estimated up to $1.2 billion: RMS.

– Japan quakes, Canada wildfire to take nat cats over budget in Q2: JPM.

– High April insured catastrophe losses led by $2bn+ Japan quakes: Aon.

– Japan quake loss “manageable” conservative reinsurance to help: A.M. Best.

– Economic losses from Japan earthquake up to $3.5 billion: RMS.

– Japan earthquake insured losses up to $2.9 billion – AIR.

– Japan, Ecuador quakes to impact Q2 reinsurance earnings.