Japan's devastating earthquake is expected to cause insured property losses of about $35 billion, a figure that makes the catastrophe one of the costliest ever for the insurance industry.
Insured property losses from quake with the magnitude of 9 in Richter scale could be in the range of 15 billion and 35 billion dollars (1.2- 2.8 trillion Japanese Yen), according to the estimates published by city-based catastrophe modeling firm AIR Worldwide on its website.
The insurance cost of the quake is nearly up to the entire worldwide catastrophe loss for the global insurance industry in 2010 and could result in higher prices in the insurance market after years of declines, AIR Worldwide said.
AIR said the figure is a preliminary loss estimate and does not account for the effects of tsunami.
A separate estimate by catastrophe risk modeling firm Eqecat said in a release that last week's earthquake had caused insured losses of between $12-25 billion. Eqecat's estimate includes the earthquake, tsunami and a series of fires.
The discrepancy in figures by two firms is mainly due to the difficulty in assessing the disaster.
"Given the enormity of the 9.1 magnitude earthquake that struck Japan, it is still in the very early aftermath of the event," senior vice president of research and modeling at AIR Worldwide Jayanta Guin said.
According to AIR, earthquake insurance penetration in Japan is relatively low, in the range of 14-17% nationwide.
About 70% of all residential construction is estimated to be of wood and about 25% concrete.
Commercial construction consists of more than 50% concrete and less than 10% wood.
AIR's insured loss estimates reflect insured physical damage to property (residential, commercial/industrial and agriculture) in both structures and their contents, resulting from quake and fire as well as direct business interruption losses.
The loss estimates do not include damage to automobiles, uninsured properties and infrastructure.
The company used a variety of scenarios including the magnitude of tremors in the range of 8.9- 9.1 on Richter scale, a depth of between 15 kilometers and 30 kilometers and a rupture width of 100 kilometers to 150 kilometers.
