The losses from the disaster in Japan, which was hit by a giant tsunami following a massive earthquake, is likely to exceed $100 billion, a media report said.
New York Times reported that besides an expected $35 billion in insurance claims from Friday’s 9.0 magnitude earthquake, the financial losses will fall most heavily on the Japanese government after it puts together the damage from the tsunami and the nuclear disaster.
Huge claims are expected against insurers for the Japanese earthquake and tsunami.
Japanese insurance companies, global insurers and reinsurers, hedge funds and other investors in catastrophe bonds are expected to bear a portion of the losses that seem likely to exceed $100 billion, NYT said.
There is uncertainty over contamination from the Fukushima nuclear plant where three explosions have rocked three nuclear reactors while a fourth caught fire.
The nuclear plant operators in Japan have to buy liability insurance through the Japan Atomic Energy Insurance Pool. They are required to buy coverage of only about $2.2 billion for liabilities, and the pool does not sell the utilities coverage for earthquake damage or business interruptions, the newspaper said.
The stocks of some US life and health insurers with operations in Japan sank Tuesday.
“The market is looking at everything that’s exposed to Japan, and we’re part of that,” said Laura Kane of Aflac that sells a popular line of cancer insurance in Japan, as well as other life and health coverage.
The newspaper said Japanese insurers jointly own reinsurer, the Japan Earthquake Reinsurance Company, that in turn is backstopped by the Japanese government.
“A meaningful portion of the losses will flow to the global reinsurance industry,” Kenji Kawada, a senior analyst, was quoted as saying.
The preliminary damage estimate includes the cost of damage to houses and their contents, farms and commercial property, as well as insured business-interruption losses. The uninsured losses could be the biggest losers of all.
