The figure reported for insurance and reinsurance industry losses due to claims paid for damage to dwellings from the earthquakes that struck the Kumamoto region of Kyushu, Japan in April has risen again and the total re/insurance industry loss is now expected to by over $4 billion.
As of the latest count, the insured loss figure, for residential dwelling property claims payments made by Japanese domestic and foreign non-life insurers, from the General Insurance Association of Japan (GIAJ), has hit $3.04 billion, an increase of 5% in the last week.
The expectation is that the total insurance and reinsurance industry loss from the Kumamoto earthquakes will likely surpass $4 billion, once business interruption is factored in, according to Steve Bowen, Director at Impact Forecasting, the risk analytics arm of reinsurance broker Aon Benfield.
The rate of increase week on week has slowed, as more of the claims filed are being settled and paid. Previously the figure rose 16% from $2.2 billion as of the 30th May 2016, to just over $2.56 billion as of the 6th June, and then again by 13% to $2.9 billion as of the 13th June.
Now, based on data to the 20th June 2016, the actual loss figure from damage to dwellings, under ‘Earthquake Insurance on Dwelling Risks’ policies, has reached $3.04 billion, up a further 5% in a week.
This does not include commercial or industrial property losses, infrastructure related losses, agricultural industry damage, or indeed business interruption claims, that could also hit some insurers and reinsurers.
The GIAJ now reports that the $3.04 billion of insurance loss is based on 93% of claims inquiries being settled and 84% paid out to policyholders, which means there is still further for this loss figure to rise.
While the government reinsurance program for residential earthquake losses takes some of the hit, the rising industry loss, with an expectation that it passes $4 billion, does mean increasing hits to some exposed reinsurance, or ILS fund, or sidecar concerns.
At least one ILS fund has now revealed a definite hit due to the Japanese earthquakes in Kumamoto, so there is an expectation that it won’t be the only one. It also suggests that reinsurance sidecars will see some attrition due to this event as well. The hit is not expected to be a large one, from this event alone.
A reminder that the Japanese government estimated the total economic loss from the Kumamoto earthquakes as up to $42 billion and business interruption claims continue to emerge, so at $4 billion this would be roughly 10% covered by insurance.
And finally the industry loss has far eclipsed the early estimates, underscoring the difficulty of estimating the insurance and reinsurance industry exposure to a Japanese earthquake event.