Kumamoto Quake Losses Estimated
Verisk estimates up to $2.1 billion in insured losses from Kumamoto earthquake in Japan
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A magnitude 6.8 earthquake struck near Kumamoto City on Japan's Kyushu Island on July 28, causing widespread damage to homes, buildings, and cultural landmarks. Analytics firm Verisk estimates insured losses will fall between JPY 220 billion (about USD 1.4 billion) and JPY 340 billion (about USD 2.1 billion), according to Verisk via Leader Post.
The quake resulted from strike-slip faulting — where two blocks of earth slide horizontally past each other — within the Eurasian Plate. Damage assessments are still ongoing across Kumamoto Prefecture.
Earthquake Damages Homes, Buildings, and Historic Sites
The July 28 earthquake hit Kumamoto City hard. Hundreds of homes and commercial buildings were damaged. Cultural landmarks and public infrastructure also took hits, Verisk reported. Structural assessments are still underway, meaning the full picture of damage is not yet clear.
Kumamoto Prefecture has earthquake history. A pair of powerful quakes struck the same region in April 2016, causing massive damage and killing dozens. The area sits in one of Japan's most seismically active zones.
Why the Loss Estimate Spans Such a Wide Range
Verisk put the insured loss estimate between USD 1.4 billion and USD 2.1 billion. That is a wide range. The firm says uncertainty around fault slip distribution, ground-motion intensity, and damage estimation all played a role, according to Pincher Creek Echo.
Earthquake insurance take-up rates in Japan also add uncertainty. Not all property owners buy earthquake coverage. That makes it harder to nail down exactly how much of the total damage is insured.
Big Losses Left Out of Verisk's Estimate
The USD 2.1 billion figure only covers insured property losses. Verisk's estimate leaves out a long list of other costs. Those include uninsured properties, roads and bridges, automobiles, and business interruption losses, Cold Lake Sun reported.
The estimate also excludes workers' compensation, marine and aviation risks, and loss adjustment expenses. Losses from landslides and fires that started after the quake are not counted either. The true economic cost of the disaster is almost certainly much higher than the insured figure.
Verisk's Role in Global Catastrophe Loss Modeling
Verisk (Nasdaq: VRSK) is a major data analytics firm that serves the global insurance industry. It builds models to estimate losses after natural disasters. Insurers use these estimates to set reserves and plan payouts, according to The Observer.
Japan is one of the world's most earthquake-prone countries. It has a well-developed earthquake insurance system, but take-up rates vary widely. Verisk's loss models account for these local factors, though significant uncertainty always remains in the hours and days after a major event.
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