In the wake of a magnitude 9.0 earthquake that struck Japan on March 11, with insured-loss estimates reaching as high as $35 billion, analysts and rating agencies fell on either side of the debate about whether the event will cause a turn in the long-running soft-market cycle.
Boston-based catastrophe modeling firm AIR Worldwide said its early range of estimates for insurance industry property loss is 1.2-2.8 trillion Japanese Yen, or $15-$35 billion (at current exchange rate). AIR said its estimates include property damage and direct business-interruption losses from the earthquake only, but not automobile losses, indirect business-interruption losses, or losses from the enormous tsunami and landslide that followed.
Robert Hartwig, president of the Insurance Information Institute (I.I.I.), noted in a statement that although the Japanese nonlife insurance industry is large—third only to the United States and Germany—commercial lines are “significantly underinsured” for earthquake risk.
Modeler Risk Management Solutions (RMS) said many commercial risks are insured only on an indemnity basis and have no coverage for loss of profits or earthquake.