¥1 trillion insurance cost seen

Kyodo News

Earthquake insurance payments resulting from the massive quake that struck the Tohoku area could top ¥1 trillion, far higher than the previous record of ¥78.3 billion following the 1995 Great Hanshin Earthquake, according to some industry estimates as of Tuesday.

“Payments will not fall into arrears” because the government is required to cover part of the insurance payments under the quake insurance system, which is jointly run by the government and nonlife insurers, a General Insurance Association of Japan official said.

Eqecat Inc., a risk assessment agency based in the U.S., projected that upcoming insurance payments at between ¥650 billion and ¥1.2 trillion, while Goldman Sachs estimated they could reach up to ¥861 billion.

The proportion of quake insurance policyholders stood at around 7 percent at the time of the Hanshin quake, resulting in about 65,000 insurance payments.

But because the proportion rose to 23 percent as of the end March 2010, the number of payments this time could climb to several hundreds of thousands, according to the estimates.