NU Online News Service, May 4, 12:57 p.m.EDT

Reinsurancebrokerage firm Holborn says estimates of insured losses from theTohoku, Japan earthquake and tsunami in March are off by as much as$23 billion.

Holborn puts insurance market losses at between $35 billion and$55 billion after adding coverages not included in predictionsgiven by the three catastrophe risk modeling firms: EQECAT, AIRWorldwide and Risk Management Solutions.

The estimates from the modelers include different kinds ofcoverage, Holborn points out in a report. For instance, RMS’sestimate is for nearly all insured losses while EQECAT excludescontingent business interruption (CBI) and AIR leaves out demandsurge, auto and others. Each excludes loss adjustment expenses(LAE).

Holborn says its “adjusted range” from modelers is $19 billionto $32 billion. To develop this adjusted range, Holborn says it“adjusted [modelers’] estimates to a common basis, excluding lifebut including marine and auto lines,” and left out CBI and onshorecargo.

Holborn’s loss-estimate range, meanwhile, includes LAE,earthquake, tsunami, demand surge, CBI and cargo, and lifecoverages.

Life and accident expected losses drove the estimate up bybetween $2 billion and $4 billion

The inclusion of CBI and cargo had a more significant impact.This line was misinterpreted by the modelers in coming up withtheir estimates, Holborn says.

“The modeling companies have analyzed the policies provided byJapanese companies and reflected that coverage is limited and oftendoes not include earthquake,” the reports reads. “But theiranalysis appears to not consider the coverages U.S. and Europeaninsurers give for their insureds’ indirect Japanese exposures.”

Holborn notes that General Motors has already filed a $1 billionCBI claim for plant exposures in the U.S. Using this as a guide,Holborn puts losses related to CBI and cargo at $5 billion to $10billion.

Additionally, Holborn says reinsurers could have as much as a$25 billion gross loss, which would match losses from HurricaneKatrina and 9/11.

“Reinsurers have fewer resources after this event (both capitaland retrocessional protections) than they did before,” Holbornsays. “Another event later in the year would cause significantstress.”