Based on currently available information, the estimates of insured property losses from Japan’s earthquake are between $15 billion and $35 billion USD according to AIR Worldwide, a pioneer in catastrophe modeling technology. This estimate does not include property damage resulting from the subsequent tsunami or losses which may emerge from the crippled Fukushima Daiichi Nuclear Power Station. Given the severity of Japan’s natural disaster, this quake and its aftermath could emerge as one of the costliest insurance events of the past century.
How was it possible that within hours of the 9.0 magnitude earthquake and tsunami that struck Japan on March 11, cost estimates for insured losses had been calculated?
The insurance industry had long needed a way to estimate insured damage from natural disasters – earthquakes, hurricanes/cyclones, floods, wildfires, tsunami, and terrorism – before and after they occur. That’s why, in the mid-1980s, AIR introduced to the insurance industry the first fully probabilistic catastrophe model capable of providing credible, scientifically-based loss estimates for thousands of potential scenarios representing the complete probability distribution of losses—including losses for the most extreme events and extreme years that may not have occurred historically.
AIR founded the catastrophe modeling industry in 1987 and today models the risk from natural catastrophes and terrorism in more than 50 countries. More than 400 insurance, reinsurance, financial, corporate, and government clients rely on AIR software and services for catastrophe risk management, insurance-linked securities, detailed site-specific wind and seismic engineering analyses, agricultural risk management, and property replacement-cost valuation.
Today, the catastrophe modeling technology that was pioneered by AIR is used by almost all reinsurers and many insurers around the world. But it is no longer only the insurance industry that relies on AIR modeling. Applications of the technology have since broadened to serve corporate risk managers, investors, mortgage underwriters, government officials, and a wide variety of other stakeholders exposed to catastrophe risk.
AIR is a member of the Verisk Insurance Solutions group at Verisk Analytics and is headquartered in Boston with additional offices in North America, Europe, and Asia.
For a current Japan event summary – Read more…
Source: AIR Worldwide, Alert Posting – Mar 12, 2011