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Sunday, March 20, 2011

Eqecat predicts Japan industry loss of $12bn-$25bn

Modelling firm Eqecat estimates that the insured loss from the Japanese earthquake will be between $12bn and $25bn, which is significantly under AIR Worldwide's forecast of a $15bn to $35bn industry loss.
The estimate includes damage from the earthquake and ensuing tsunami and fires, as well as losses from automobiles, marine, life and personal accident insurance line. Commercial costs - one area where it is expected costs will be passed onto the international reinsurance markets - were not mentioned. Eqecat predicted $8bn-$15bn in quake-related losses, of which about a quarter or $2bn-$4bn will be ceded to the Japan Earthquake Reinsurance Pool (JERP).

In contrast with AIR, the firm said that tsunami flooding losses are modelled as they are covered under earthquake policy endorsements.

Life losses were put at $2bn-$3bn. Eqecat noted the average life insurance policy limit was about $360,000 and that at least 10,000 people are currently confirmed dead or missing. Eqecat predicted that marine losses would make up $1bn-$3bn of the total insured costs, while personal accident lines would constitute $1bn-$2bn and auto losses would be up to $1bn.
The firm noted that few damaged cars would have earthquake cover as standard policies exclude the peril.

Its marine estimates included losses to ships, piers and wharves, as Eqecat cited reports that 90 large commercial ships and thousands of smaller vessels have been pushed far inland by the tsunami.

Eqecat previously forecast that total economic losses from the disaster would exceed $100bn.

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