Reinsurance News

Buffett targets Japan earthquake re/insurance with Berkshire Hathaway

27th December 2016 - Author: Steve Evans

Warren Buffett is targeting a move into Japanese earthquake reinsurance through his Berkshire Hathaway Specialty Insurance unit, according to a report.

The Nikkei reported that Berkshire Hathaway Specialty Insurance is set to move into Japanese earthquake reinsurance, by backing Japanese insurers, citing Marc Breuil, Regional President Asia at BHSI.

Buffett’s Berkshire Hathaway has noted the protection gap on Japanese earthquake insurance cover, with many companies in the country going unprotected. As a result the company believes there is significant room for growth in the peril region and plans to begin operating there in the first half of 2018, according to the Nikkei.

Breuil told the Nikkei that Berkshire will plan to offer multi-year re/insurance coverage as a way to help stabilise premiums for buyers in Japan, citing the fluctuation of costs of earthquake reinsurance as a reason for the gap in protection there.

It’s interesting as Japanese quake cover is often cited as a diversifying peril by global reinsurers and can be extremely low-priced at the more remote risk levels of reinsurance programs.

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With Berkshire Hathaway’s might targeting Japanese quake risk as well it could suggest that rates will stay low, or even drop, as capacity rises that targets Japanese risks.

However, if the earthquake insurance uptake among Japanese companies can be pushed upwards, through greater availability and more stable costs of cover, it could result in more premiums becoming available making this an attractive target for Buffett’s reinsurer.

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