Earthquake Risk Transfer for Japan
Each day about 1,000 tremors that can be felt are produced in Japan. On a long run expected basis, Japan’s earthquake loss potential (insured and uninsured) averages to over $20 billion per year. Over 37 M7 and greater damaging earthquakes have impacted Japan since 1900, and property damage from the costliest events of the past few decades are estimated to total over $400 billion. Based on recent events, 10-15 percent of Japan’s total earthquake loss potential is covered by the global (re)insurance community (Quantifying and managing Japan earthquake risk, 2019).
The amount insured under Earthquake Insurance can be set within a range of between 30% and 50% of those under fire insurance. The amount insured is also limited to 50 million yen for buildings and 10 million yen for household goods (Outline of Japan’s Earthquake Insurance System, 2019). Therefore, an earthquake preparedness alert, which shows the probability of a major earthquake is increased, causes waves of new high-risk customers and expanding penetration rate in all of the insurance policy categories for total loss, large half loss, small half loss or partial loss.
Expected earthquake loss for Japan in short-term
Earthquake risks need to be transferred? download the report.