Reinsurance Rates Increase Up to 60% on Japan Quake, Swiss Re’s Weber Says
Reinsurers, taking record first- quarter losses on Japan’s earthquake and other disasters, are raising prices for coverage of temblors in the Asian nation by as much as 60 percent, Swiss Reinsurance Co. said.
“On the reinsurance side, typical rate increases we have seen on April 1 are between 20 and 50, or 20 and 60 percent,” said Matthias Weber, head of property and specialty at Swiss Re, the world’s second-biggest reinsurer. “Other perils increased as well, but it’s significantly less. There it’s more of the order of 5 to 10 percent in Japan,” Weber said today at the Bloomberg Link Japan conference in New York.
Reinsurers had their most costly start to a year in the first quarter because of natural disasters including floods and a cyclone in Australia and a quake in New Zealand. The first- quarter insured losses may exceed $52.6 billion, according to Aon Benfield, the reinsurance broker of Chicago-based Aon Corp. That compares with $40.6 billion in losses for all of 2010.
The magnitude-9 earthquake in Japan and ensuing tsunami on March 11 damaged Tokyo Electric Power Co.’s nuclear plant in Fukushima prefecture, 220 kilometers (137 miles) north of Tokyo, leading to the worst nuclear disaster since Chernobyl in 1986.
The catastrophe, which Prime Minister Naoto Kan called the country’s worst crisis since World War II, left more than 23,000 people dead or missing and destroyed or damaged more than 510,000 homes, according to the National Policy Agency.
The government estimates damage from the quake and tsunami may reach 25 trillion yen ($312 billion). Kan said he plans a second extra budget for reconstruction after Parliament approved a 4 trillion-yen package in May.
Munich Re, the world’s biggest reinsurer, said last month it had a quarterly loss of 947 million euros ($1.4 billion) on claims related to the disasters. Berkshire Hathaway Inc., run by billionaire Warren Buffett, said the Japan disaster alone may lead to costs of about $1.1 billion for its insurance segment. American International Group Inc. (AIG)’s first-quarter profit slumped 85 percent in part on costs tied to earthquakes.