Japan earthquake could cost $35 billion and be 2nd highest cat loss behind Katrina
It was reported today that insured losses from last week’s Japan quake could hit as much as $35 billion. Though it is still a preliminary estimate, it could go down as the most expensive earthquake in modern history. It could also trigger higher premiums in the insurance market after years of soft market conditions.
AIR Worldwide reported the loss estimate range between $14.5 billion to $34.6 billion, based on a range of 1.2 trillion yen to 2.8 trillion yen, converted at 81.85 yen to the dollar. Of all the catastrophes since 1970, adjusted for inflation, it would rank as the second costliest behind Hurricane Katrina.
At the start of 2010, analysts said it would take a $50 billion event to stem the price declines in the market for just a year. Since then, the industry has seen at least $10 billion in losses from an earthquake in New Zealand, unknown losses from Australian flooding, and an estimated $8 billion to $10 billion in losses from unrest in the Middle East. The losses could cumulatively be enough to trigger the hard market.
Connect with Phil Edmundson on LinkedIn.