NU Online News Service, May 10, 11:22 a.m.EDT

Catastrophe riskmodeler EQECAT has dramatically changed its estimate of insuredlosses from the Tohoku, Japan earthquake to between $22 billion and$39 billion.

Shortly after the March 11 earthquake EQECAT released aninsured-loss estimate of between $12 billion and $25billion.

The adjustment comes after reinsurance brokerage firm Holbornsays modelers were significantly underestimating marketlosses.

EQECAT says the upward shift in estimating losses is due toseveral factors. First, water depths from the tsunami that followedthe earthquake were thought to be eight meters (26 feet), but thedepths were more than 25 meters (82 feet) and extended inland about10 kilometers (nearly 6.25 miles).

“Measured water depths were generally beyond the height ofprepared tsunami defenses,” EQECAT says. “In many coastal areaseven the tallest buildings were completely inundated with water.Damage to wood structures was virtually 100 percent—houses werecompletely removed from their foundations.”

About 28,000 people are dead or missing. More than 50,000structures have been wiped out or severely damaged.

Losses were also adjusted due to a better understanding ofdamages caused by liquefaction, landslides, power outages,transportation interruption and disruption at the nuclear powerplant in Fukushima.

More News & Analysis on the Japanese Earthquake andTsunami

Property insurers will bear a large portion of losses. Revisedproperty loss estimates resemble EQECAT’s original prediction forlosses to the entire market—between $15 billion and $25 billion. Ofthis amount, $7 billion to $12 billion is attributed to Japan’sunregulated cooperative insurance companies, collectively known asKyosai. Kyosai does not cede losses to the government’s JapanEarthquake Reinsurance Pool (JER) like the general non-lifecompanies do. Losses to the general non-life companies areestimated to be in the range of $3 billion to $5 billion, EQECATsays.

The non-life commercial insurers, which rarely cover businessinterruption, are expected to pay out between $5 billion to $8billion, the modeler adds.

EQECAT’s overall loss estimate also includes marine, auto, lifeand personal accident lines of coverage, as well as demand surge.The estimate does not include loss-adjustment expenses, contingentbusiness interruption, or losses related to the current emergencyat power plants.

Though the Fukushima plant suffered the most damage and releaseof radioactivity, 13 nuclear reactors at three power plants are nowout of operation, EQECAT reports.