Swiss Re has released a preliminary estimate of its claims costs, net of retrocession and before tax, from the earthquake and the tsunami in Japan of $1.2 billion. The reinsurer cautioned that these “estimates are subject to a high degree of uncertainty as the event continues to unfold, making loss assessment particularly challenging.”
Overall insured loss figures have been estimated by EQECAT at between $12 and $25 billion. Other estimates have indicated that the losses could be as much as $35 billion.
Swiss Re’s CEO Stefan Lippe stated: “We extend our sympathies to the Japanese nation as they cope with the human tragedy and the destruction caused by this event. We remain committed to using our expertise and experience to support clients in Japan as they manage the risks related to such devastating events. It is the purpose of our industry to aid communities in their recovery and redevelopment efforts.”
The bulletin also explained that a “government-run insurance scheme provides cover for earthquake shock and tsunami for residential properties insured by non-life companies. This cover is not reinsured in the international reinsurance market.
“Cover for fire-following earthquake is offered by primary insurers and is typically protected by their reinsurance treaties.
“Insurance cover for commercial and industrial risks is sold in the private market for earthquake, fire following earthquake and tsunami, and is commonly reinsured.
“Coverage for property policies excludes nuclear contamination. Coverage for nuclear facilities in Japan excludes earthquake shock, fire following earthquake and tsunami, for both physical damage and liability. Swiss Re believes that the incident at the Fukushima nuclear power plant is unlikely to result in a significant direct loss for the Property & Casualty insurance industry.”
Swiss Re reiterated its cautionary statement that the “claims estimate is subject to a higher than usual degree of uncertainty, and may need to be subsequently adjusted, for various reasons. First, Swiss Re expects that determining precise claims information will take several months.
“The company’s current estimate is driven primarily by modeled estimates for its portfolio. Calibrating this to ceding clients’ estimates, and to original policyholder losses, will take an extended period of time, because of the current situation in Japan.
“Second, the high proportion of commercial and industrial claims in the reinsured share of this event will extend the evaluation process.”
In addition the reinsurer noted that it has “made a donation towards instant relief measures and also pledged to support the rebuilding efforts. Swiss Re employees are being encouraged to make charitable contributions through the Swiss Red Cross and the Save the Children Fund, which will be matched by Swiss Re. Swiss Re remains fully committed to continuing to provide capacity to the Japanese market and maintaining its strong relationships with clients.”
Source: Swiss Re
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