Earthquake Risk Transfer for Japan

Earthquake Risk Transfer for Chile; Short-term earthquake loss
Fig.1 - Hashed circles represent current Earling undercover regions.

Each day about 1,000 tremors that can be felt are produced in Japan. On a long run expected basis, Japan’s earthquake loss potential (insured and uninsured) averages to over $20 billion per year. Over 37 M7 and greater damaging earthquakes have impacted Japan since 1900, and property damage from the costliest events of the past few decades are estimated to total over $400 billion. Based on recent events, 10-15 percent of Japan’s total earthquake loss potential is covered by the global (re)insurance community (Quantifying and managing Japan earthquake risk, 2019).

The amount insured under Earthquake Insurance can be set within a range of between 30% and 50% of those under fire insurance. The amount insured is also limited to 50 million yen for buildings and 10 million yen for household goods (Outline of Japan’s Earthquake Insurance System, 2019). Therefore, an earthquake preparedness alert, which shows the probability of a major earthquake is increased, causes waves of new high-risk customers and expanding penetration rate in all of the insurance policy categories for total loss, large half loss, small half loss or partial loss.

Expected earthquake loss for Japan in short-term

Earthquake risks need to be transferred? download the report.

How EPA Affects Recent Insured Losses

Fig.2 - Japan Apr 14, 2016 earthquake loss and earthquake preparedness effect on short-term insured loss.

Affordable Risk Transfer

Once a loss occurs, it is too late to revise an insurance policy. Consequently, the policyholder must be extremely diligent during policy purchase and renewal. Understanding specific insurance requirements, carefully calculating the property and business interruption values, outlining contingency plans, and anticipating the potential losses at each location are all key steps in maximizing future insurance recoveries. In sum, paying close attention to the potential impact of a loss at the insurance procurement stage will help to minimize issues and maximize recovery when a loss does occur.

Proposing the best time-window(s) for maximizing insurance coverage before a catastrophe is the Earling solution to transfer earthquake risks. Instead of 365 days insurance, maximize the current coverage only for a few days in each year.

Now that revising insurance policies once a loss occurs is too late, Earling helps to know the best time to transfer risk through new policies or extending the current coverage for a limited period of time for example only for 10 days and not for 365 days of year.
Maximizing insurance coverage after a catastrophic loss is difficult for any company but Earling Earthquake Preparedness Alerts assists to do it before a catastrophe occur.

Well Known Risk Takers

Tackle your risks with our solutions to the big players. We propose enterprise companies as well as SMEs and individualizes the best time to purchase a new earthquake policy or extending the current coverage to make it inexpensive.
risk takers
Currently, Japan, New Zealand, Greece, Turkey, Caribbean, Chile, Ecuador, Taiwan, Romania, Indonesia, California are the regions, which Munich Re accepts their risks. In addition, South Africa, Oklahoma and Utah are subject to further work. Also, between the regions that Earling issues Earthquake Preparedness Alerts, Japan, New Zealand, Caribbean, Chile, Ecuador, Taiwan, Indonesia and US (California, Utah) are undercover by Swiss Re to take the risks.

How we can help?

In general, Earling has a global seismic monitoring network and specialists that are subject matter experts. Regarding the challenges mentioned above, Earling is been able to deliver support.

  • In the pressure on profitability, performance management and key performance indicator settings.
  • In the entrance of parametric insurance markets and issuing alternative products, Earling can deliver independent advice by our global resources.
  • To keep control on the impact of catastrophic events, Earling can assist in optimizing, validating on Cat and reinsurance programs modelling.