NU Online News Service, March 15, 3:20 p.m.EST

The Japan earthquake and tsunami revealed a potential flaw incatastrophe modelers' planning, as modelers pointed to the factthat they did not account for the complete devastationthat hit the island nation.

In its report earlier this week that estimated between $15 billion and $35 billion in propertylosses from the quake, Boston-based AIR Worldwide said it does notinclude such events as took place in Japan last week in itsmodels.

"…the AIR Earthquake Model for Japan does not account for theeffects of tsunami," AIR said. "As more detailed informationbecomes available, AIR plans to independently estimate the loss dueto tsunami and provide a combined loss estimate that avoidsdouble-counting in the affected areas."

Robert Muir-Wood, chief research officer for risk modeler RiskManagement Solutions, told NU Online News Service that forsome models tsunamis are a "deterministic footprint," but are notgenerally a part of catastrophe modeling.

The earthquake and tsunami in Japan will "very likely" maketsunamis a fundamental part of catastrophe modeling in the future,he said.

There are two reasons why tsunamis, especially inJapan, were not a part of catastrophe models, Mr. Muir-Wood said.First, the government has spent a lot of money on sea walls thatwere thought to protect the populace from such an event. But therecent event "came clear over the top."

Second, the area of concern was with Tokyobay, where it was thought a tsunami would not be asignificant problem.

"People believed that this was not such a big risk," hesaid.

For modeling purposes, tsunamis would only be a concern if theywere an extreme loss event, noted Mr. Muir-Wood, and thisparticular event was not only extreme, but very rare. The last suchtsunami of this magnitude in Japan was recorded 1,100 yearsago.

As for nuclear catastrophe modeling, it is not an insurableevent for core insurers, he noted. However, there are lessons to belearned from the reactor failures in Japan from a risk modelingperspective, said Mr. Muir-Wood, and it is an area that RMS mightget into in the future, but not one that would be the focus of aninsurable risk.

For insurance, executives insuring nuclear risks said thatearthquake and tsunami risks are excluded from coverage.

As for the status of the nuclear plants in Japan, the International Atomic Energy Agency said today thatthere were explosions in three nuclear reactors at the FukushimaDaiichi nuclear plant in Japan. Three other reactors at the sitewere shut down for maintenance before the tsunami.

Elevated levels of radioactivity were detected in the area andan evacuation of a 20 kilometer zone (12.5 miles) was put intoeffect. People within a 30 kilometer (19 mile) radius of the plantwere advised to take shelter indoors.

A 30 kilometer (19 mile) no fly zone was also established aroundthe plant, the IAEA said.

The IAEA said a 6.1 magnitude earthquake was reported around13:31 UTC (8:30 a.m. EDT)  in Eastern Honshu, Japan. TheHamaoka nuclear power plant is located about 100 kilometers (62miles) from the epicenter of that earthquake. The plant operatessafely, the IAEA said.