• 4 minutes US-backed coup in Venezuela not so smooth
  • 7 minutes Why Trump will win the wall fight
  • 11 minutes Oil imports by countries
  • 13 minutes Maduro Asks OPEC For Help Against U.S. Sanctions
  • 3 hours Climate Change: A Summer of Storms and Smog Is Coming
  • 57 mins Teens For Climate: Swedish Student Leader Wins EU Pledge To Spend Billions On Climate
  • 1 day The Quick Read On MBS's Tour of Pakistan, India And China
  • 1 day BMW to add 2,000 more jobs at Dingolfing plant
  • 1 day Iran Starts Gulf War Games, To Test Submarine-Launched Missiles
  • 1 day Tension On The Edge: Pakistan Urges U.N. To Intervene Over Kashmir Tension With India
  • 2 hours An expected? Saudi Arabia Would Need Oil At $80-$85 A Barrel To Balance Budget
  • 10 hours Washington Eyes Crackdown On OPEC
  • 1 day Saudi A to Splash $100 Bln on India
  • 2 days NEW FERUKA REFINERY
  • 1 day Indian Oil Signs First Annual Deal For U.S. OilIndian Oil Signs First Annual Deal For U.S. Oil
  • 10 hours Can the World Survive without Saudi Oil?
  • 1 day Venezuela: Nicolas Maduro closes border with Brazil
Alt Text

Global Economy Throwing Up Red Flags For Oil

Investors are feeling increasingly gloomy…

Alt Text

Russia May Feel Pinch From Oil Cut Deal This Year

Russia’s central bank warned that…

Jess McCabe

Jess McCabe

Jess is a writer for Environmental Finance.Environmental Finance is the leading global publication covering the ever-increasing impact of environmental issues on the lending, insurance, investment…

More Info

Trending Discussions

Too Early to Estimate Economic Cost of Japanese Earthquake

As Japan reels from the human catastrophe of the earthquake and tsunami that struck on Friday, the insurance industry said it is too early to estimate the economic losses.

On Friday, Japan was struck by a massive earthquake, which triggered a devastating tsunami. Prime Minister Naoto Kan said that the country is facing its worst disaster since World War II and more than 10,000 are feared dead.

On the first day of trading after the earthquake and tsunami, the Nikkei 225 closed at 9,620.49, a 6.18% drop. The Bank of Japan injected ¥15 trillion ($184 billion) into the money markets to cushion the economic shock.

An early estimate from catastrophe modelling firm AIR Worldwide suggests that insurance companies will face a bill of ¥1.2 trillion-2.8 trillion for property damage from the earthquake alone, not counting the tsunami. It is working on models which take the tsunami into account.

"Given the enormity of the Mw9.1 earthquake that struck Japan two days ago, it is still in the very early aftermath of the event," said Jayanta Guin, senior vice-president of research and modelling at AIR Worldwide. "Search and rescue efforts are still underway and damage assessment has only just begun, while considerable uncertainty still remains in the seismic parameters that define the event."

Munich Re said it is too early to estimate the economic losses from the disaster or the insured losses.

Losses from the unfolding incidents at nuclear power stations are unlikely to affect private insurers, however, a Munich Re spokeswoman said, because nuclear power insurance excludes damages stemming from earthquakes and tsunamis.

The Japanese government runs an earthquake insurance fund. Japanese reinsurers will feel the brunt of losses from this fund, because the terms of the fund specify that risk cannot be transferred to foreign reinsurers such as Munich Re.

“At this time, our thoughts and sympathy are with the Japanese people, who have experienced untold suffering through this natural catastrophe,” said Munich Re CEO Nikolaus von Bomhard.

Swiss Re said it is “currently evaluating its exposure to the event. Given the  nature of the destruction, combined with the ongoing recovery efforts and evacuation areas, it will take some time to estimate the damage.”

Some catastrophe bonds, issued by insurance and reinsurance companies to pass the financial risk of major disasters to capital market investors, do cover Japanese earthquake risk. It is not yet clear if any of these bonds have been triggered and it could be some time before this becomes clear, said Gary Martucci, an analyst at ratings agency Standard & Poor’s (S&P), which provides ratings for seven cat bonds covering Japanese earthquake risk. Tsunamis are only explicitly listed as the trigger in two of these bonds, issued by Swiss Re under its Vega Capital vehicle.

S&P has made no changes as yet to the ratings of these cat bonds.

Power outages experienced by some of those responsible for calculating the data may increase delays. “We are awaiting results from the calculation agents and will take ratings actions as necessary,” said Martucci.

By. Jess McCabe

Source: Environmental-Finance




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News