Japan claims could total $2.4 billion

Koichiro Watanbe, chairman of the Life Insurance Association of Japan, has estimated that life insurers in Japan could have to pay policyholders a total of around 200 billion yen (US$2.4 billion) following the earthquake and tsunami that struck the island in March. According to the National Police Agency, the estimated figure is more than four times the amount paid out after the Kobe earthquake in 2005, which killed over 6,400 people – the recent catastrophe has killed more than 13,000 people, with an additional 14,000 still missing.
However, the estimated loss is less than that anticipated by global consulting firm Towers Watson, which estimates that life insurance companies in Japan could suffer losses of between $2.9 billion and $4.6 billion. In addition, ratings agency Moody's Investor Services has estimated claims losses for Japan's domestic life insurers and foreign insurers operating in the country to be in the range of 200-300 billion yen, when also taking into consideration the accompanying nuclear plant crisis. Moody's also predicts that, aside from losses relating to mortality and morbidity claims, life insurers could sustain revenue losses from business disruption, lower sales, and possible premium suspensions. The company's analysts added that a decline in premiums may be initially driven by a suspension of required premium payments as some insurers and regulators try to protect and support their policyholders.
Moody's analysts also believe that, due to the pressing financial needs faced by many consumers, premium income could be negatively impacted by some policyholders lapsing their life and health insurance policies. However, on the up side, insurance sales could increase over time as the natural disaster highlights the need for insurance coverage.