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March 20, 2011 at 08:00 PM
The Great Tohoku Earthquake and the resulting tsunamis and aftershocks may lead to life and health insurance claims with a value equivalent to about $3.7 billion to $5 billion.
Analysts at Moody’s Investors Service, New York, have published that estimate in a report on the effects of series of disasters that struck Japan starting March 11.
“Life insurers with exposure to the region will be impacted by increased death claims, higher accident and health benefits, and lower revenues,” Moody’s says.
But the insured value of the claims resulting from the disasters – 300 billion yen to 400 billion yen – should be manageable relative to the capital and, in most cases, the earnings capacity, of the life insurers operating in Japan, Moody’s says.
Japan’s National Police Agency has confirmed that more than 8,800 people died as a result of the disasters, and that more than 12,000 are missing.
Tens of thousands of survivors are reported to be living in shelters or other places with inadequate food, water, medicine and heat, and some survivors and others are reporting on Twitter that some of the survivors are suffering from influenza-like illnesses.
The earthquakes and tsunamis also have caused severe damage to at least one Japanese nuclear power plant.
“The situation in Japan remains uncertain and fluid,” Moody’s analysts say. “The wild card in all of this is the nuclear story which is unfolding. Should severe meltdown occur and the effects be felt as far away as Tokyo for an extended period of time, the economic impact to life insurers in terms of adverse business and financial impact is much more material. Under the scenario of severe radioactive release,
it is our view that companies with a significant in-force of [accident and health] policies would incur meaningful losses right away, with life insurance claims occurring more gradually and escalating over the coming years.”
In Japan, “with very minor exceptions, policies do not contain nuclear, biological, or radiological exclusions,” the analysts say.
