Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Kumamoto quake residential insurance claims paid hits $3.2bn


Around $3.2 billion of insurance claims for damage to dwellings from the earthquakes that struck the Kumamoto region of Kyushu, Japan in April, have now been paid, according to data from the GIAJ, as the insurance and reinsurance industry toll rises, but at a steadier pace.

Kumamoto castle damaged by the earthquakesAs of 27th June 2016, 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 reached $3.2 billion, a further 5% increase in the past week.

With this figure being solely for residential property insurance losses, the expectation is that, once commercial, industrial and any other losses such as business interruption are factored in, the total impact to the insurance and reinsurance industry from April’s earthquakes in Japan will be over $4 billion.

The number of inquiries filed with insurers only rose by 2% in the last week, reflecting the slowing of the industry exposure to the Kumamoto earthquakes, with the majority of claims now at least settled, if not already paid.

In fact the speed at which claims have been settled and paid after this earthquake has been impressive, with the earthquake still only 10 weeks passed and so much of the toll having been paid for by the insurance sector.

The rate of increase of claims paid has settled now, as more of the claims filed are being settled and paid. 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, before then rising just 5% to $3.04 billion at the 20th June and now another 5% to the $3.2 billion reported as of the 27th June.

The GIAJ now reports that the $3.2 billion of insurance loss is based on 94% of claims inquiries being settled and 86% paid out to policyholders, which along with the still rising inquiries does mean this loss figure has further to rise. Of course much of the residential loss is dealt with by government reinsurance programs, but the rising figure suggests all other sources of insurance and reinsurance loss will also still be increasing.

At least one ILS fund said that it took a definite hit due to the Japanese earthquakes in Kumamoto, and we understand that some reinsurance sidecars saw an attritional impact as well as a number of private quota shares. It should be noted that these are all said to have been minimal in nature.

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.

Finally this industry loss has far eclipsed the early estimates, underscoring the difficulty of estimating the insurance and reinsurance industry exposure to a Japanese earthquake event.

Also read:

Kumamoto quake insured loss to reach $4bn, claims paid rises again.

Kumamoto, Japan quake insurance loss nears $3bn, up further 13%.

Kumamoto quake economic loss up to $42bn, Sony shows BI an issue.

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.

Artemis Live - ILS and reinsurance video interviews and podcastView all of our Artemis Live video interviews and subscribe to our podcast.

All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.

Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.

Print Friendly, PDF & Email

Artemis Newsletters and Email Alerts

Receive a regular weekly email newsletter update containing all the top news stories, deals and event information

  • This field is for validation purposes and should be left unchanged.

Receive alert notifications by email for every article from Artemis as it gets published.