Catastrophe modellers KCC release Japan quake risk whitepaper

By Gabriel Olano

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[A new] report, which used Karen Clark & Company’s Japan Earthquake Reference Model, found that despite the country’s robust building codes and innovative construction techniques, it still remains at huge risk of large loss-producing events. One such factor is that the most seismically active regions correspond to the most densely populated areas.

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According to the model’s simulations, a repeat of an event such as the Great Kanto Earthquake of 1923 (magnitude 7.9) would result in total property losses (insured and uninsured) of over US$1.5 trillion. Meanwhile, a larger magnitude event impacting Tokyo could result in total property losses exceeding US$3 trillion.

Scientists estimate that there is an over 80% chance of a major event near Tokyo within the next 30 years. In the long run, Japan’s earthquake loss potential averages over US$20 billion per year. Based on recent events, between 10% and 15% of this loss potential is covered by the global re/insurance market.