According to initial estimates by the Catastrophe and Risk Solutions group at Verisk, a data analytics and technology provider to the global re/insurance industry, the 6.8 magnitude earthquake that struck near Kumamoto City on Japan’s Kyushu Island on 28 July will result in insured losses of between JPY 220-340 billion, approximately USD 1.4-2.1 billion.
This estimate accounts predominantly for insured property losses from ground shaking and liquefaction and is before any recoveries under Japan’s earthquake insurance program. The estimate includes insured physical damage to residential, commercial, industrial and mutual property risks, including both structures and contents.
It also include a comparatively small contribution from other modelled earthquake perils. The loss range reflects uncertainty related to fault slip distribution, ground-motion intensity, damage estimation, and earthquake insurance take-up rates in Japan, the report explained.
However, it excludes losses to uninsured properties, infrastructure, automobiles, business interruption, workers’ compensation, marine and aviation risks, loss adjustment expenses, demand surge and losses arising from certain non-modelled perils such as landslide and fire following.
The July earthquake caused widespread damage across Kumamoto Prefecture, where the strongest tremors were recorded in Uki City and Hikawa Town.
Authorities reported hundreds of damaged homes and commercial buildings, damage to cultural landmarks and public infrastructure, and ongoing assessments of structural impacts throughout the affected region.
Additionally, there was significant disruption in transportation networks, including damage to highways, bridges and rail infrastructure, while approximately 48,000 households experienced power outages immediately after.
The earthquake also affected one of Japan’s most important manufacturing hubs. Several semiconductor, electronic, and automotive facilities temporarily suspended operations while inspections and damage assessments were conducted, raising concerns about supply chain disruptions, explained Verisk.
According to the US Geological Survey (USGS), the earthquake occurred south of Kumamoto at a shallow depth of approximately 10 kilometres, caused by shallow strike-slip faulting within the Eurasian Plate.
According to initial reports by Aon and Howden Re, the July earthquake is expected to cause relatively lower losses than the 2016 Kumamoto earthquakes, which caused $53 billion in economic and $7.7 billion in insured losses.
