Experts warn companies to investigate far reaching business interruption losses
The insurance and reinsurance industries are feeling the full force of the Tohoku earthquake in Japan and the tsunami that followed.
Insured exposures for the catastrophe are estimated to be between $14 and $33bn. However, the Japanese Reinsurance Corporation (JER) has approximately $7.4bn of claims paying capacity.
Some of these losses will therefore pass into international reinsurance markets.
Daniel Saville of City law firm Reynold Porter Chamberlain, encouraged affected companies to “be proactive" and to “investigate far reaching CBI [Contingent Business Interruption] exposures” to avoid later disputes.
Business contingency is one of the key issues in this disaster with the Japanese automotive industry being particularly badly affected.
Companies based further afield, such as Apple, have also been compromised by the situation as certain components for their products are only produced in Japan.
Richard Cook, head of reinsurance at Xchanging Claims Services, stated that it is “almost impossible to predict which accounts will make claims due to the complexity of the global supply chain.”
Reinsurance and insurance companies will have to engage with the situation in Japan in order to stabilise world markets, he said. For their part, companies will have to be aware of what they are getting involved in, said Cook. “There are potential elephant traps awaiting us.”
Japanese earthquake Statistics
-Tohoku earthquake was the fifth largest earthquake since 1900
-15,019 people killed
-9,056 people missing
-88,873 homes damaged/destroyed
-3,970 roads damaged/destroyed
-71 bridges damaged/destroyed
*Figures confirmed by the Japanese National Police Agency