
Moody’s RMS, a risk modeling firm, has recently provided an estimate of the total insured losses resulting from the Mw7.5 earthquake on the Noto Peninsula in Japan. The earthquake, which occurred on January 1, is projected to have caused insured losses between JPY435 billion and JPY870 billion, equivalent to approximately $3 billion to $6 billion.
The estimates were derived using Moody’s RMS Japan Earthquake and Tsunami high-definition (HD) Model. This comprehensive analysis includes property damage, contents, and business interruption across residential, commercial, and industrial sectors. It encompasses losses from both private and mutual insurance markets, including Kyosai insurers. The projected losses account for a range of impacts, such as strong ground shaking, earthquake-induced fires, tsunami inundation, land sliding, and liquefaction-induced ground deformation. Additionally, the estimates factor in post-event loss amplification (PLA) and inflationary trends. However, it’s important to note that this estimation does not cover non-modeled exposures like transport and utility infrastructure, government, or automobile lines.
The earthquake struck near Anamizu in Ishikawa Prefecture, with the Japan Meteorological Agency reporting a seismic intensity of seven in the Shika Town Municipality. The United States Geological Survey attributes this earthquake to shallow reverse faulting, a significant concern for Japan’s seismic risk profile.
Chesley Williams, a senior director at Moody’s RMS, emphasized the importance of understanding seismic risks, particularly shallow crustal earthquakes. The event adds to Japan’s history of significant shallow crustal earthquakes, like the 1995 Great Hanshin Earthquake and the 2016 Kumamoto Earthquakes. This incident serves as a stark reminder of the extensive and varied seismic risks Japan faces and the critical role of insurance in mitigating the financial impact of such disasters.