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March 13, 2011 at 08:00 PM
Insurers and industry analysts are starting to think about how the earthquakes and tsunamis that struck northeastern Japan Friday might affect the life and health sectors.
The focus has been mainly on property-casualty insurers since an earthquake with a magnitude of about 9.0 hit the Tohoku region that day, many quakes with a magnitude over 6.0 followed, and mammoth tsunamis devastated coastal communities in the region.
Japanese officials have confirmed that at least 1,500 are dead, and officials in a port city, Minamisanriku, say 10,000 people may have died there alone.
Air Worldwide Corp., Boston, says insured property-casualty losses from the earthquakes alone may exceed $35 billion.
At press time, Tokyo Electric Power Company, Tokyo, is struggling to control at least three nuclear reactors, and Japanese residents are familiarizing themselves with radiation exposure terms such as millirem and nanogray.
Japan Credit Rating Agency Ltd. (JCR), Tokyo, has posted a commentary suggesting how difficult thinking about the losses will be.
“The fate of many people remains unknown,” the rating agency says. “JCR expresses its heartfelt sympathy to the injured and wishes earliest possible recovery.”
Moody’s Investors Service, New York, today issued a special comment on the effects of the Tohoku earthquake but did not estimate what insured life and health losses might be.
An analyst in the New York office of Credit Suisse offered initial thoughts on the situation in Japan.
“The human element of this news is deeply disturbing,” the analyst says. “The financial implications for U.S. life insurers with large Japanese operations are not likely to be material to annual earnings or capital.”
Face values and insurance penetration rates in the affected regions are probably relatively low, and the penetration of non-Japanese life insurers there is probably lower than in the rest of the country, the analyst says.
“Aside from mortality claims, we also note the potential for elevated hospitalization claims and given concerns over damaged nuclear plants, elevated cancer claims over the next few years,” the analyst says.
An analyst at Citi Investment Research & Analysis, New York, says he doubts whether the earthquake will have a material effect on the earnings of the U.S. life insurers he covers, then adds, “Of far more importance, any loss of life is terrible.”
AFLAC
Aflac Inc., Columbus, Ga. (NYSE:AFL), a company with large cancer insurance, supplemental medical insurance and life insurance operations in Japan, says all of its employees in Japan are safe.
