Isolated from Japan Quake insurance industry

2:18 PM industry, insurance, Isolated, Japan, Quake No Comments

Japan's massive earthquake, tsunami and nuclear disaster should not, likely, the most expensive natural catastrophe on the files, but the impact on the private insurance industry that Hurricane Katrina will exceed in 2005.

This is partly because Japanese House and apartment owners and companies heavily leave insurance system, rather than private insurance on a State-funded earthquake. As a result, only about 14 to 17 percent of the Japanese houses private earthquake have insurance, estimates the reinsurance Association of America.

The Japanese system is also a cap on total damage by the Government and private insurers paid. If total claims about above, are $60 billion payments pro-rata which means that House and apartment owners and companies would have to for a partial coverage of their losses to settle.

This is a relatively small payment for the private insurance industry, and it is distributed to more than one player.

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Nevertheless, be the total cost of the last week 9.0 magnitude quake and resulting tsunami astronomical. Estimates put total losses at $180 billion private bank, a figure which could later when leaks from a crippled nuclear power plant further damage, radiation

The figure on the files would - making Japan the most expensive natural catastrophe earthquake greater than Hurricane Katrina, the losses created $125 billion and some 1,300 people killed in the year 2005. Losses were about half of Katrina's insurance, which covers the insurance industry, in a $66 billion.

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Thanks to the limits of liability and a longtime financial attack by the Japanese Government, the cost of the quake of Sendai, the private insurance industry will be probably far lower. Most cited widely estimates of insured damage comes from AIR worldwide, insurance consultant, who provides these losses in the range of $ 15 billion to $35 billion. This figure, the tsunami damage not cover could increase according to Jayanta Guin, AIR worldwide head of research and modelling.

"It is too early in the episode;" We hundreds all geophysical data and simulation of ground motion and estimate damage based run computer simulations using this simulation, "he said." "We are working out the details to see whether we can further customize it."

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The insurance impacts from the Sendai Quake likely above all of the Japanese domestic non-life insurance and life insurance industries "with a healthy portion of the community together global reinsurance" absorbed, said Robert Hartwig, President of the insurance information Institute, an industry group.

The biggest wild card estimates is damage the threat to life and property by the crippled Fukushima Dai-Ichi nuclear plant, which was leaking radiation. These potential costs are recognized, but the private insurance industry is fully shielded from the financial effects.

After the Japanese nuclear Act of 1961 operators of nuclear plants for any damages liable as a result of a "severe disaster of an exceptional nature," according to the reinsurance Association. Tokyo electric power, the plant operator, has its own private property insurance for the work, but analyst at Swiss Bank Vontobel is excluded from the directive according to Stefan Schurmann damages due to earthquakes and tsunamis.

He said "These disasters by the property and casualty insurance policies are excluded,".

If insurance companies Quake purchases of large natural disasters such as the Japan and tsunami face, they are based generally on the other, larger insurers - so called "reinsurers", which serve as a backstop, when losses get too large. After raising the reinsurance industry keeps premiums after the large losses from Katrina, currently surplus capital from $50 to $70 billion, according to investment bank Credit Suisse.

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The financial hit in the reinsurance industry will be tempered by payouts on private insurers by the Japanese Government, provides a separate earthquake reinsurance attack to the Japanese insurance industry. All of this global reinsurers can be well positioned to handle what could be the most expensive natural disaster in history.

Could contribute to, another round of increases as the moderate, which followed the huge payouts from Hurricane Katrina.

Insurance premiums cause usually in cycles, increases in so-called "hard" markets, if heavy losses insurers premiums to enforce, and fall into the "soft" markets, if large cash spark competition to new customers and discount discounts pillows.

Although the cost of the coverage of the earthquake Japan can be manageable, a string of losses, the more than $50 billion, including the large payouts on damage from the recent earthquake in Chile and New Zealand and floods in Australia have total results. So even before the earthquake of Japan, the cycle was swinging again created by surpluses of accumulated post-Katrina from the "soft" market.

But while premiums rise in Japan is expected, analysts say consumers anywhere else in the world probably not see large increases - if and as long as a more major disaster hits.

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