A magnitude (Mw) 7.8 earthquake struck central New Zealand on November 13, according to the U.S. Geological Survey (USGS). The quake occurred at 11:02 PM local time (11:02 UTC) about 93 kilometers (57 miles) north-northeast of Christchurch and about 215 kilometers (133 miles) southwest of Wellington.
Posts Tagged ‘Earthquake’
Earthquakes in Taiwan and the Kumamoto prefecture of Japan and floods in southern China were the largest events. The reinsurance share of these losses appears modest. Barring a major catastrophe before the end of the year, catastrophe reinsurers are expected to return a healthy profit in Asia Pacific for the fourth year in a row.
Industry Must More Effectively Harness Potential of Satellite, Drone and Aerial Technologies
Advances in the development of ”visual intelligence” based on multiple data sources including satellite imagery and drone footage have the potential to significantly enhance claims and CAT response processes and underwriting decision making when companies harness that potential effectively, according to Dr. Beverley Adams, Head of CPR (Catastrophe Planning & Response) at Guy Carpenter.
Here we review GC Capital Ideas posts on how catastrophic exposures are adversely impacting public entities.
Here are the most recent CAT-i stories covering January through June of 2016.
Toyota Motor Corporation expects to lose 80,000 units of production after shutting down nearly all of its assembly plants in Japan as a result of the Kumamoto Earthquake. The shutdowns occurred after disruption to two of its suppliers, Aisin Seiki, which produces automotive components and Renesas Electronics, a manufacturer of automotive microchips (1). Aisin Seiki said production at two plants that make engine and auto parts, semiconductors and other components have been stopped since April 14. Renesas’s plant was also shut down (2).
The catastrophe modeling firm RMS estimated the economic loss for property risks to be between USD2.5 billion and USD3.5 billion (1). This estimate includes only residential, commercial, and industrial property and contents. Catastrophe modeling firm AIR estimated the insured loss to be between USD1.7 billion and USD2.9 billion for property risks (2). Both catastrophe modeling firms’ estimates exclude infrastructure, business interruption and contingent business interruption.
Earthquake Coverage in Japan, Part II: Residential, Commercial, Industrial and Earthquake Fire Expense Insurance
The other source of residential earthquake insurance is through a limited number of cooperative insurers. As opposed to residential earthquake insurance under the government’s program, cooperative earthquake insurance is entirely run and managed by each individual cooperative insurer that writes the class, with no governmental support. The original policy terms tend to be somewhat similar in basic design to those of the government’s program backed policies, but reinsurance arrangements are entirely at the discretion of the individual cooperatives. Almost all the cooperatives writing this class purchase non-proportional reinsurance from the international reinsurance market and, in certain cases, also access the capital markets for protection via catastrophe bond issuance.
Japan is known for its earthquake potential; and like many other earthquake-prone countries, the government participates in insuring earthquake risk. For houses and residential buildings there are two major sources of earthquake insurance. One is via commercial non-life insurance companies with support from the government and the other is via cooperative insurers. For all buildings and man-made structures other than houses and residential buildings, earthquake insurance is available from commercial non-life insurance companies, albeit on a strictly controlled basis.
The Ryukyu Trench is situated southeast of Kyushu where the Philippine Sea plate begins its subduction beneath Japan. While earthquakes have occurred several hundred kilometers northwest of the Ryukyu Trench, most earthquakes are at significant depths along this subduction zone. Thirteen magnitude 5-plus earthquakes have occurred at shallow depths of less than 50 kilometers (31.1 miles) within 100 kilometers (62.1 miles) of the Kumamoto earthquake over the past century, according to the USGS. In addition to the two events in April, a shallow magnitude 6.6 earthquake occurred in 2005 off the north coast of Kyushu. Two other events occurred in 1975 that were of magnitude 5.8 and 6.1 at distances of 40 kilometers (24.9 miles) and 65 kilometers (40.4 miles) to the northwest. The graphic below from the USGS illustrates the depth of the Ryukyu Trench at 20 kilometer (12.4 miles) increments in orange. The depth of the trench beneath Kumamoto city is roughly 140 plus kilometers (87.0 miles).