The powerful earthquakes that recently struck Japan’s Kyushu Island may generate the second-highest property insurance payout total of any natural disaster in the country.
According to the General Insurance Association of Japan, insurers have received 68,913 damage claims as of April 21, the Nikkei Asian Review
The number has already surpassed the 65,427 successful claims caused by the January 1995 quake that hit Kobe area. The tremor resulted in the currently second highest payout total of USD$704 million.
The figures from the April 16 Japan quake are seen to break that record partly due to the growing popularity of earthquake insurance, according to the Nikkei Asian Review.
The report said the percentage of Japanese households that had purchased earthquake insurance ballooned from 9% in 1994 to 29% in 2014.
Last week, catastrophe modelling firm AIR Worldwide estimated that insurance losses on residential and commercial property could range from USD$1.7 billion to $2.9 billion, excluding losses to land, infrastructure, cars, business interruption or workers' compensation.
‘Moderate impact’ on insurers
Despite the payout total record that the recent quake may produce, rating agency AM Best expects non-life insurers affected by the catastrophe to be able to withstand losses.
The agency said the earthquake will have a moderate impact on insurers’ earnings but little effect on financial strength.
AM Best said the quake’s impact could be mostly mitigated by the release of catastrophe reserves.
“Japanese domestic non-life insurance companies have strengthened their catastrophe risk management over the past five years since the companies were hit in 2011 by the Japan earthquake and tsunami, as well as the Thailand floods,” the agency said.
Fitch also said that the quakes will not undermine the financial soundness of Japanese non-life insurers.
“Fitch understands Japanese non-life insurers underwrite commercial earthquake risks in a prudent manner with effective reinsurance schemes in place,” it said.
According to the Japan Fire and Disaster Management Agency, the recent tremors either damaged or destroyed more than 3,900 residences and 120 non-residential buildings. At least 48 people were reportedly killed while more than 900 were injured.