Japan is in the midst of the most catastrophic disaster in recent history. On Friday, the nation suffered a magnitude 8.9 earthquake that was the most powerful geological event in the region in millennia. The quake triggered powerful tsunamis that invaded the shores of Japan and caused grievous damages to the Northern provinces. While the earthquake threatened to tear apart the nation’s foundations, the unrelenting tsunami washed away everything it its path.
Insurance companies are struggling to fathom the cost of the disaster. Initial estimates claim that more than $35 billion in insured property loss have been accrued from the earthquake alone. These estimates do not take into account the damage caused by the tsunami.
Japan is also struggling with a growing nuclear crisis. Friday’s earthquake caused damage to the cooling systems at three nuclear power plants. The plants are still in an “alarming state” according to Prime Minister Naoto Kan.
“This will certainly have a major effect on insurers,” says Duncan Ellis, the U.S. Property Practice Leader for insurance broker Marsh Inc. Northern Japan was the most affected, but there are reports of property damage in Tokyo and Osaka.
AIR, a worldwide risk management firm, is working closely with NASA to obtain detailed images via satellite to discern the extent of the damage from the quake and tsunami. The images will help AIR present their independent estimate as more information becomes available.
Insurance officials are at a loss currently. While they are confident that their estimated cost of the quake is one of optimistic exaggeration, the total cost of the disaster could take months
to calculate. With a death toll of more than 1,200, the price of damaged property is only one of the concerns facing insurers.
Japan is currently experiencing a nationwide shutdown. Concerns over the ailing nuclear power plants, aftershocks and volcanic eruptions have sown fear throughout the country. The Japanese people, however, are resolute and cooperation between citizens and government has rarely been seen elsewhere.
Despite the dire circumstances, Japanese officials are optimistic that the nation will have a powerful recovery. The insurance industry, however, is likely in for some major changes and may never look the same.