Insurance professionals could help avert trauma, pain and remorse by helping clients construct a Plan B should they carry debt.
Japanese nonlife insurers are expected to suffer 1.32 trillion yen (US$16.9 billion) in losses related to the March 11 earthquake and tsunami and typhoons Talas and Roke in September.
As of Dec. 14, about 1.19 trillion yen of insurance claims are related to dwelling losses from the earthquake and tsunami, according to the General Insurance Association of Japan. Japanese nonlife insurers received 847,402 claims with 735,071 claims already paid.
In the northeastern region, insurance claims for dwelling risks amounted 769.7 billion yen, with 369,922 payments related to the earthquake. Japan's eastern region, including Tokyo, reported 422.4 billion yen in insured claims as of Dec. 14. Hokkaido island paid out 739 million yen in claims, according to the nonlife trade body representing 25 nonlife insurance companies in Japan.
In September, typhoons Talas and Roke generated nonlife claims of 36.2 billion yen and 93.3 billion yen, respectively, according to the nonlife association. The two typhoons hit Japan's main island of Honshu with significant flood and landslide damage caused by heavy rain. Motor insurance claims related to Talas and Roke amounted 5.8 billion yen and 9.9 billion yen, respectively. Fire insurance claims were 28.4 billion yen and 79.9 billion yen, respectively.
Japan's nonlife sector has been hit by a series of natural catastrophes including earthquake, typhoons and floods in Thailand over the past year. Insurers completed 98.7% of claims investigations for dwelling risks related to the earthquake, said Shuzo Sumi, chairman of the insurance association.
The recent Thailand floods have submerged many residential homes and industrial estates, with substantial impact on manufacturing operations. Investigations of insurance losses are still under way in Thailand, according to the nonlife association.
In the first half of the 2010 fiscal year, ending Sept. 30, 2011, net paid claims increased 32.6% to 2.8 trillion yen for Japan's nonlife insurance industry, according to the association. The sector's loss ratio rose to 85.4 as of September, from 66 a year earlier. Nonlife insurers posted a 40.8% drop in net income to 101.8 billion yen in this first half amid higher insurance claims and lower investment yields.
The nonlife operating environment remains tough in Japan as a result of local and overseas natural catastrophes, worsening equity markets and rising loss ratios in the domestic motor business, said Sumi in a statement. The sovereign debt crisis in Europe, global economic slowdown and appreciation of the yen against other currencies, along with the Thailand floods and the March 11 earthquake's adverse impact on local gross domestic product, have hampered Japan's economic recovery.
The earthquake is expected to cost the global insurance industry US$35 billion, according to Swiss Re. The insured losses were only a fraction of total losses. "Estimated to be at least US$210 billion, total economic losses are likely to be much higher once damage to nuclear facilities and disruption on global supply chains are included," said Swiss Re in a report.
(By Iris Lai, Hong Kong bureau manager: [email protected])