Global catastrophe risk modeller, AIR Worldwide, has estimated that the intense rainfall and flooding that hit southwest Japan in June and July of 2018, claiming the lives of at least 200 people, will drive an insurance industry loss of as much as JPY 423 billion (US$4 billion).
AIR Worldwide notes that after a number of heavy downpours from June 28th onwards, several days of record-breaking rainfall hit parts of Japan until July 8th, which resulted in widespread inland flooding in over 30 prefectures across western and south-central Japan.
An official at the Japan Meteorological Agency described the precipitation as “at a level we have never experienced,” and alongside a number of rivers and streams bursting their banks, landslides also occurred.
As well as substantial damage to buildings and infrastructure, the flooding led to significant business interruption, says AIR Worldwide.
The number of lives lost makes it Japan’s deadliest flood since 1982, and it’s also the country’s deadliest natural catastrophe since the Tohoku earthquake in 2011.
AIR puts the insurance industry-wide losses from the floods at between JPY 284 billion (US$2.6 billion) and JPY 423 billion (US$4 billion), which includes insured damage to property (residential, commercial, industrial, and agricultural/mutual), both structures and their contents, and automobile.
According to the Fire and Disaster Management Agency (FDMA), over 46,000 residential buildings were destroyed, damaged, or inundated.
However, and despite AIR noting that the business interruption impact is considerable and that significant damage to infrastructure occurred, the modelled insured loss range estimate does not include landslides, losses to land, losses to infrastructure, losses to CAR/EAR, marine hull, or marine cargo lines of business, business interruption losses, loss adjustment expenses, or demand surge, being the increase in costs of materials, services, and labour as a result of increased demand post-event.
So, the insurance and reinsurance industry-wide losses from the floods have the potential to be higher than the range provided by AIR, although only time will tell just how costly the floods turn out to be for global insurers and reinsurers.