Millions of people in Japan have been affected by the Tohoku earthquake, the subsequent tsunami and the continuing situation with the Fukushima Daiichi nuclear facility. Many lives have been lost, and the country continues to cope with the aftermath of all this. This tragedy has had a direct effect on the (re)insurance industry, as well. Carriers have been working diligently to ensure that they can absorb the losses from these catastrophes, as well as the others that have occurred over the past six months.
The capital held in the reinsurance industry is there, in part, to help insurers respond to catastrophes and to continue providing sufficient protection to them around the world. For this reason, it was particularly important that cedents and the global reinsurance markets approached the April 1, 2011 renewal in a responsible and positive manner. The fact that this happened provided the stability and discipline necessary for continued smooth (re)insurance market operation. Only 20 days after the March 11, 2011 catastrophe, the Japanese market was effectively, either through renewal or extension, fully covered.
This is testament to the manner in which the reinsurance community, both buyers and sellers, can work constructively together, and we should recognize this great quality.
It may still be too early to gauge the full impact of the earthquakes on the reinsurance market. But as more information becomes available, you will need sufficient context in order to take appropriate action for your companies and clients.
This week, Guy Carpenter is running a series of articles about the state of the reinsurance market in Japan that can be used to help you manage your capital effectively. To have these articles delivered directly to your inbox every day, click here to register for our GC Capital Ideas alerts.