March 25th, 2011

Update: 9.0Mw Earthquake Strikes off Northeastern Japan

Posted at 10:18 AM ET

eq-japan-5-smallA powerful earthquake struck off the coast of northeastern Japan at 05:46:23 UTC (14:46:23 local time) on March 11, causing severe shaking near the epicenter region and triggering a massive tsunami that devastated coastal communities. Estimates issued by AIR Worldwide and EQECAT suggest insured losses could be between USD12 billion and USD30 billion. There are fears the death toll could now exceed 25,000 people, according to reports. Widespread property damage has been reported across northern Japan despite the country boasting the strictest building standards in the world. Officials say the situation at the quake-damaged nuclear facility in Fukushima has improved over recent days, but remains serious. According to both the U.S. Geological Survey (USGS) and the Japanese Meteorological Agency (JMA), the earthquake’s magnitude was measured at 9.0, making it the fourth most powerful earthquake in the world since 1900 and the largest in Japan since modern instrumental recordings began 130 years ago. The USGS added that the earthquake was located 130 kilometers (80 miles) east of Sendai and 373 kilometers (230 miles) northeast of Tokyo, at a depth of 32 kilometers (19.9 miles). More than 500 aftershocks have hit the region since the main earthquake, the most powerful at 7.1Mw. Reports said the earthquake was nearly 8,000 times stronger than February’s event in New Zealand that devastated the city of Christchurch.

Reports from coastal gauges indicate the tsunami waves officially reached heights exceeding 7 meters (23 feet) along parts of Japan’s eastern shoreline. There have been unconfirmed reports in the local media that waves of 10 meteres (33 feet) high hit Sendai City, severely damaging the city’s port before sweeping up to 10 kilometers (6 miles) inland. According to EQECAT, more than 2 million people live in cities that were inundated by the tsunami. The tsunami waves have reportedly caused widespread damage in the prefectures of Miyagi and Fukushima, with massive surges of debris-filled water sweeping away buildings, cars and ships. Reports indicate the tsunami damaged many port facilities along Japan’s eastern coastline (from Hokkaido in the north to Okinawa in the south). Earlier, the Pacific Tsunami Warning Center (PTWC) issued alerts for much of the Pacific basin, including the U.S. and Canadian west coast, Hawaii, central and southern America, Australia and New Zealand. Although the tsunami wave lost much of its energy as it moved across the Pacific Ocean, wave heights of around 2 meters (6.6 feet) were recorded in Hawaii and California, damaging boats and causing some flooding. Reports said the tsunami damage in California is likely to exceed USD50 million. No major tsunami-related damage was reported elsewhere in the Pacific.


Hazard data illustrated in the CAT-i map was taken from i-aXs®, Guy Carpenter’s web-based risk management platform. i-aXs users can view impacted areas on any map as well as see how their portfolios were affected. Please contact your broker or GC Analytics (SM)  representative for assistance or go to for further information.

According to the USGS, more than 73 million people live in areas impacted by a Modified Mercalli Intensity (MMI) of V or higher (as shown by Table 1). The towns and cities of Sendai, Hitachi, Ishinomaki, Shiogama, Iwanuma and Watari experienced intensity VIII on the MMI scale, equivalent to severe shaking with the potential for moderate to heavy building damage, the USGS said. Yokohama, Chiba and the capital of Tokyo (population of more than 8 million), meanwhile, were hit by MMI intensity of VII, very strong shaking that can cause moderate to heavy structural damage. According to the JMA, the town of Kurihara in Miyagi Prefecture registered a maximum 7 on its seismic intensity scale. Twenty-eight towns and cities (including Wakuya, Tome, Osaki and Natori) in the prefectures of Miyagi, Fukushima, Ibaraki, and Tochigi recorded 6+ while Tokyo recorded 5+, according to the JMA. EQECAT, meanwhile, estimates an area of 35,000 square miles observed severe damage to property and infrastructure.

It is feared losses will be in the billions of dollars, according to early estimates. Risk Management Solutions (RMS) estimates that the direct economic loss from the earthquake and tsunami could be between USD200 billion and USD300 billion. RMS added that only a “minor proportion” of this would be covered by insurance, although it was still too soon to assess the total insured loss. EQECAT estimates the economic damage from the earthquake could exceed USD100 billion (with property damage estimated at USD20 billion). In terms of insured losses, EQECAT estimates the insured cost will be between USD12 billion and USD25 billion, with between USD2 billion and USD4 billion of this amount expected to be ceded to the Japan Earthquake Reinsurance Company (JER). EQECAT said their estimate includes the effects of earthquake shaking, damage from the subsequent tsunami and fires, and losses to automobiles, marine, life and personal accident insurance lines.

AIR Worldwide, meanwhile, has revised its initial loss estimate to a narrower range of USD20 billion and USD30 billion (from an initial estimate of USD15 billion and USD35 billion). This estimate reflects insured physical damage to residential and commercial property resulting from shake, fire following and tsunami. According to AIR, its estimate breaks down to give a loss of between USD11 billion and USD21 billion for ground-shaking and fire-following and insured losses of between USD8 billion and USD9.7 billion for the tsunami. AIR added its estimate includes JER payouts and is net of government recoveries. However, the estimate does not factor in business interruption costs (direct or indirect), demand surge or any losses to casualty and life lines. Earlier, AIR estimated there is about USD24 billion of insured property located in the 3 kilometere (1.8 mile) band along the coast of the four prefectures most affected by the earthquake. AIR added there is approximately USD300 billion of insured property in the area of Japan most directly affected by the earthquake’s shaking.

According to reports, extensive damage has been reported in the prefectures of Fukushima, Miyagi, Ibaraki, Iwate, Tochigi and Chiba. Reports said residents in Miyagi Prefecture had just 15 minutes to evacuate before the tsunami waves reached the coastline. The current official death toll stands at more than 10,000 but officials have warned that the fatalities in tsunami-hit Miyagi Prefecture alone could exceed 15,000. More than 17,000 people are still unaccounted for and estimates suggest that more than 500,000 people have been displaced. About 240,000 households in the north are still without electricity in near-freezing weather and more than 700,000 households in ten prefectures are without running water, according to officials. Reports said the port of Minamisanriku in Miyagi Prefecture was swept away by the tsunami, while the town of Rikuzentakada in Iwate Prefecture was almost completely submerged. Local media reported that farmland around Sendai was submerged by muddy water and the waves pushed debris across the runway of the city’s airport. In the town of Soma (Fukushima Prefecture), a wave height of 7 meters (23 feet) was recorded. Other towns and cities in the region reported severe tsunami damage.

Dozens of towns and cities along the 2,100 kilometer (1,300 miles) stretch of Japan’s eastern shore were also violently shaken by the earthquake. Officials have reported more than 145,000 residential and commercial buildings damaged or destroyed so far, including 1,800 homes in Minamisoma (Fukushima Prefecture). A World Bank official has said it could take five years to rebuild the damaged buildings and infrastructure in the affected region, at a cost of up to USD235 billion. Japan’s government, meanwhile, has said it will cost as much as 25 trillion yen (USD310 billion) to rebuild the damaged prefectures of Iwate, Miyagi, Fukushima, Hokkaido, Aomori, Ibaraki and Chiba. Prime Minister Naoto Kan said the earthquake has caused “tremendous damage over a wide area”. Over 300 fires were ignited in the northern prefectures of Fukushima, Sendai, Iwate and Ibaraki, according to local media. A large section of the town of Kesennuma was burning hours after the earthquake and fires were reported in the center of Sendai, prompting officials to evacuate some 70,000 people.

Some pockets of structural damage have also been reported in Tokyo after high rise buildings were violently shaken by the earthquake. Shattered glass and other debris was scattered across several streets in the capital. About four million properties suffered power outages in Tokyo and its surrounding areas and a large fire reportedly broke out in the Odaiba district of the city (at least 20 other fires were reported elsewhere in Tokyo Prefecture). Hundreds of flights were cancelled after both airports in Tokyo (Narita Airport and Haneda Airport) were closed immediately after the earthquake, although reports say Haneda has now reopened and Narita is partially operational.

The earthquake also badly damaged nuclear and oil operations in the country. Eleven of Japan’s 55 nuclear reactors were shutdown following the earthquake, prompting officials to announce a program of rolling power cuts that will affect 3 million customers, including large factories and buildings, particularly in eastern regions of the country. Officials said the blackouts are expected to continue until the end of April, although they may resume in the summer to meet peak demand. Reports indicate three power plants were subjected to significant shaking during the earthquake (Onagawa, Fukushima Daiichi and Fukushima Daina), and fears remain over the fate of the Fukushima Daiichi plant with core damage reported to three of its six reactors.

Three explosions and two fires have hit the facility since the earthquake. The explosions occurred due to hydrogen build up at the buildings housing reactor 1, reactor 2 and reactor 3, and two fires broke out at reactor 4. Tokyo Electric Power (Tepco), the plant’s operator, said four workers were injured in the first blast at reactor 1 and eleven people were hurt in the reactor 3 explosion. All explosions followed cooling system breakdowns. On March 18, Japan raised the alert level at the plant from a rating of 4 to 5 (on a 0 to 7 scale). This compares to level 7 given to the Chernobyl disaster in 1986 and level 5 given to the Three Mile Island accident in 1979.

Over the last week, workers have been battling to cool the reactors and spent fuel ponds to bring the situation under control. According to reports, around 20 workers have been injured in the attempts to stop radiation leaks at the plant. Engineers have successfully connected power cables to all six reactors at the plant and hope to test the cooling systems at the facility, if they are operational. However, the International Atomic Energy Agency (IAEA) said the situation remains serious and engineers warned it could take weeks or even months to restore power to all the reactor units. Reactor 3 remains a concern after black smoke was seen rising from the unit on March 23. Engineers were earlier forced to halt testing of the electrical system at reactor 2 after radiation levels spiked. There is also concern about the rising temperature at reactor 1. The IAEA said radiation dosages of up to 400 millisieverts per hour had been recorded at the facility. Exposure to over 100 millisieverts a year is a level which can lead to cancer, according to the World Nuclear Association.

Consequently, around 185,000 people have been ordered to evacuate the area within a 20 kilometere (12 mile) radius of the plant and another 140,000 residents living between 20 kilometers (12 mile) and 80 kilometers (50 miles) of the plant have been asked to leave their homes voluntarily. Residents living near the plant have also been told not to drink tap water or eat eleven types of green leafy vegetables because of contamination worries. Consequently, the government has ordered a halt to some food shipments from four prefectures (Fukushima, Ibaraki, Tochigi and Gunma). Despite this, several countries have found low levels of radiation in some Japanese food imports, although the amounts found have in no cases been life-threatening. In Tokyo, meanwhile, radiations levels in tap water rose to heights that were deemed unsafe for infants to drink earlier this week, but have since fallen.

Meanwhile, a state of emergency at a second nuclear facility in Onagawa was declared after excessive radiation levels were recorded there. According to reports, the insurance industry could be spared significant payouts from these nuclear incidents as coverage for such facilities generally exclude earthquake damage and many Japanese homeowners have nuclear exclusions in their policies. Indeed, Swiss Re has announced that physical damage and liability coverage for nuclear facilities in Japan generally excludes earthquake, fire following earthquake and tsunami, and the problems at Fukushima Daiichi are unlikely to result in a significant direct loss for property and casualty insurers.

Elsewhere, reports said a massive blaze at the Cosmo oil refinery in Ichihara City (Chiba Prefecture) engulfed storage tanks and Japan’s largest oil refiner suspended refinery operations in Sendai, Kashima and Negashi. It is estimated that more than 30 percent of Japan’s refining capacity was shutdown as a result of the earthquake. Operations at several manufacturing facilities also remain suspended, with plants in and around Sendai particularly badly damaged. Several car manufacturers, including Toyota, Honda and Nissan, have suspended production while operations at some electronic firms such as Sony, Canon and Panasonic remain shutdown. The semiconductor industry has also been badly affected. A major explosion was also reported at a petrochemical plant in Sendai. Several manufacturing facilities that escaped any damage remain shut as they are unable to get the parts they need to resume production, according to reports. Global supply chain problems have also forced some manufacturers outside of Japan to slow production. To compound matters, reports said the rolling power cuts are expected to hinder manufacturing output over the next several weeks.

Infrastructure, including roads, bridges, ports, trains, airports, utilities and communication networks, has also been badly damaged. In Iwate Prefecture, officials said roads were badly damaged by the tsunami waves while transport links in and out of Sendai were cut due to damaged road, bridges and railways. Officials said an irrigation dam in Fukushima failed and all ports along Japan’s east coast were closed as many sustained tsunami damage. All forms of transportation were disrupted, with bullet train services to northern Japan halted and rapid transit in Tokyo suspended, stranding many workers in the city center. However, reports now indicate that train services outside the affected area have resumed. Several roads remain been closed, however.

The 9.0Mw earthquake was the latest in a series of quakes that hit offshore of northeastern Honshu in early March. A 7.2Mw earthquake struck off the same coast on March 9and was followed a day later by a 6.3Mw quake. Japan is accustomed to powerful earthquakes and the country’s worst previous event occurred in 1923 when around 143,000 people were killed by an 8.3 magnitude earthquake, according to reports. A 7.2Mw earthquake hit Kobe City in 1995, killing 6,400 people. Despite economic losses of around USD100 billion from the Kobe event, insured losses were approximately USD6 billion. According to AIR, earthquake insurance penetration in Japan is relatively low (ranging between 14 percent to 17 percent nationwide).

In a separate incident, a 6.2Mw earthquake struck eastern Honshu on March 15, 2011, around 116 kilometers west-south-west of Tokyo. According to EQECAT, the shaking from this event is likely to have damaged property in the region. Consequently, the economic damage from the 6.2Mw event is likely to be between USD1 billion and USD2 billion while the costs to (re)insurers could reach USD500 million, according to EQECAT.

Table 1: Estimated Population Exposed to Significant Earthquake Shaking 

Estimated MMI

Estimated Population Exposure

Perceived Shaking









Very strong







Sources: USGS, WSI, Reuters News, Associated News, Agence France Presse, CNN News, BBC News, Kyodo News, AIR Worldwide, EQECAT, RMS, Insurance Day

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Guy Carpenter publishes CAT-i reports for major natural catastrophes worldwide. These reports cover catastrophes including worldwide tropical cyclones, earthquakes, major UK and European floods and any other natural event that is likely to incur a significant loss to the (re)insurance industry. Please email if you wish to be added to the free email distribution list.

Guy Carpenter compiles RISK-i reports for major technological or man-made events worldwide. These reports cover risks to property, transport and life including explosions, fires, crashes, engineering disasters and terrorist attacks that are likely to incur a significant loss to the (re)insurance industry. Please email if you wish to be added to the free email distribution list.

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