In the past week, the speculation about the terrible events in Japan – and what they will mean for the reinsurance and insurance market – have begun to calm down. Already badly hit by the New Zealand earthquakes and Australian floods, the first quarter of 2011 has already proved costly – and we have yet to see how the wind blows in the Atlantic this hurricane season.
Opinion on the insured cost of the earthquake and tsunami vary from $10 billion to $35 billion. But with each estimate looking at different perameters, it is difficult to compare like with like. Some say the cost will be much higher once international business interruption (BI) cover is taken into account, while others believe that the way the Japanese market works, the cost will, in fact, be surprisingly low. Some in the know say that total cost of reinsured losses will be as little as $6 billion ($2.5 billion Zenkyoren, $1 billion unknown and $2.5 billion non-life). Others say it has been grossly underestimated with losses from international BI to roll in for years and years to come.
What is certain is that prices in the Australasia region are already going up. Retrocessional cover has increased in price and while earthquake renewals in Japan have been put back from the April 1 renwal date, initial figures show that windstorm cover in Japan has already risen by between four and seven percent.
What is less clear is what will happen with pricing in other catastrophe-prone areas around the world. In the US, there will be squeals of “not fair” if prices go up from events happening the other side of the world in say, Florida.
We will have to wait and see – and let me know what you think or have heard.
In the meantime, this is the most frightening video of the tsunami I have seen so far, and well worth taking the six minutes of your life out to watch it.
