NU Online News Service, March 14, 3:05 p.m. EST

The private insurance market is likely not heavily exposed to damage at nuclear reactors in Japan resulting from the 9.0 magnitude earthquake and subsequent tsunami.

Reports say that three nuclear reactors at the Fukushima Daiichi plant have failed and may have partially melted down. The cooling system for the nuclear reactor has failed, along with the back-up system. There have been two reports of the outer building exploding from hydrogen gasses that built up in them, but officials are saying that radiation has not reached critical levels.

More News & Analysis on the Japanese Earthquake and Tsunami

Michael Cass, general counsel for American Nuclear Insurers, based in Glastonbury, Conn., a joint underwriting company consisting of 21 insurance companies, said under the reinsurance treaties with the Japanese electric companies, damage resulting from earthquake, tidal wave or volcanic activity is excluded under the policy.

He said any claims would be handled by the government. He cautioned that the situation is still developing, but he believes the carrier has limited exposure.

A spokesman for nuclear power plants reinsurer Nuclear Electric Insurance Ltd., headquartered in Wilmington, Del., said the company believes it has no exposure to the power plant failure because earthquake and tsunami’s are excluded from its policies.

Chaucer Holdings PLC, a Lloyd’s insurance group, said its specialist Nuclear Syndicate 1176 that provides coverage for Tokyo Electric Power Co.—the owner of the Fukushima Daiichi and Fukushima Daini power plants—has no coverage for property damage or business interruption in place.

At the Onagawas plant, owned by Tohuku Electric Power Co., there is property damage coverage, but earthquake and tsunami are excluded perils.

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Meanwhile, two of the world’s leading reinsurers said they are still in the process of assessing their insurance exposure to the events in Japan.

Munich Re and Swiss Re issued statements today saying that their thoughts and sympathies lie with the Japanese people as they deal with the aftermath of quake that has resulted in the death of possibly as many as 10,000 people and economic losses that according to one estimate could run into $100 billion.

“It is far too early at this stage to issue an estimate of economic and insured losses,” Munich Re said.

Swiss Re said it is currently “evaluating its exposure to the event.”

However both companies pointed out that much of the risk is retained domestically, some through public and private partnership.

A spokesperson from Munich Re reiterated the company’s earlier statement, noting that the current situation remains “not entirely clear” and it is “continually changing” as rescue operations remain ongoing.

The spokesperson for Munich Re noted in an e-mail that the company retains between 10 to 15 percent of the Japanese reinsurance market, with €666 million (U.S. $930 million at the current exchange rate) gross written premium.

A Swiss Re spokesperson said it will be some time before the company understands the full extent of its exposure.

Both companies affirmed their commitment to the marketplace in Japan.

“Munich Re has enjoyed business relations with Japanese insurance companies since 1912,” said Nikolaus von Bomhard, Munich Re’s chief executive officer in a statement. “We are very closely committed to our Japanese clients and the country as a whole and will play our part in dealing with the losses. Munich Re can be relied on, especially in times like these.”

“Our role is to support the Japanese people in quickly recovering from this unprecedented and tragic event,” said Stefan Lippe, Swiss Re chief executive in a separate statement. “Swiss Re Group remains wholly committed to continuing to provide capacity to the Japanese market and maintaining our strong relationships with clients.”

Both companies said that employees were all safe and accounted for. Swiss Re sent its employees home due to the risk of aftershocks, the spokesperson said.

Special Reports /

Private Insurer Exposure Light For Japan Nuclear Plant Damage After Quake

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