Insurance pays 80% of NZ quakes

THE INSURANCE industry will pay an estimated 80% of the overall cost of the February 2011 earthquake in New Zealand, according to the latest data finding of Swiss Re.

However, it will only have to cough up no more than 17% for the disastrous earthquake and tsunami in Japan in March 11 last year.

Swiss Re says earthquake insurance penetration, in fact, is highest in New Zealand, and is very low in Japan, particularly for commercial properties.

The giant reinsurer says that globally earthquake insurance penetration is low, even in countries with high seismic risk in a published warning about the lack of coverage and a message about the size of the cost to the insurance industry in payouts.

Seismic events caused economic losses of more than US$276 billion (about A$268 billion) in 2010 – 2011, yet highly earthquake-prone countries remain underinsured.

Much of the world is still vastly underinsured against earthquake risk, says Lucia Bevere, senior catastrophe data analyst at Swiss Re Economic Research & Consulting and co-author of the publication,

Underinsurance is often due to low risk awareness in earthquake-prone areas, she says.

Earthquake models should consider secondary-loss factors more comprehensively.

he cumulative catastrophic impact of earthquakes on society is overwhelming, she says in Swiss Re’s latest expertise publication “Lessons from recent major earthquakes”.

Cruise disaster estimate at $946m

AN ESPIRITO Santo analyst puts loss at up to £653 million (about A$946 million), according to the UK’s Insurance Times yesterday.

The UK report quotes Espirito Santo analyst Joy Ferneyhough saying the Costa Concordia cruise ship disaster will cost insurers between US $500 million and $1 billion making it “the largest ever marine loss”.

The previous largest loss was the oil tanker Exxon Valdez in 1989, which cost insurers around $500 million including pollution costs. The total amount insurers pay for the Costa Concordia disaster will depend on the liability claims. Ms Ferneyhough says the hull value is rumored to be $500 million and is expected to be a total loss.

There will be removal of wreck charges and liability claims for the injured and dead passengers on top of this, according to the Insurance Times.

Acknowledgement to: insurancenewsaustralia.com