(Bloomberg) — Insurance claims from the powerful earthquake that struck Japan’s Noto Peninsula on New Year’s Day are likely to be low compared with other major tremors that have hit the country in recent years.
While it is too early to assess the exact damage, claims may total from ¥21 billion to ¥90 billion ($145 million to $620 million), Bloomberg Intelligence analyst Steven Lam wrote in a Jan. 4 note. That’s lower than the ¥231 billion average from the country’s prior four major quakes, including the 2016 Kumamoto disaster and the 2011 Fukushima quake, he said.
Insured losses “are likely to be small, with no major impact on Japanese non-life insurers’ earnings,” Fitch Ratings said.
Major non-life insurers have dispatched employees to the area in the northwestern coast to assess the damage and help policyholders affected by the magnitude 7.6 quake, which destroyed hundreds of homes in Ishikawa prefecture and killed at least 203 people.
But there are fewer residences there than in prefectures affected by previous earthquakes, and no major commercial facilities or factories appear to have sustained major damage, limiting costs for insurers, BI said. As most of the destruction was concentrated in homes, many claims are likely to be covered by the government-backed residential earthquake reinsurance program.
Therefore, Lam said that Japan’s major casualty insurers — Tokio Marine Holdings Inc., MS&AD Insurance Group Holdings Inc. and Sompo Holdings Inc. — are likely to cover losses in their existing budgets for domestic natural disasters for the second half of the fiscal year ending March.
“Underwriting risks from earthquakes are low for Japan’s three non-life groups, mainly because their exposure to earthquake risks has been low and within manageable levels,” Fitch analysts wrote in a note dated Jan. 9.
(Updates with comments from Fitch in third and last paragraphs)
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