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III says Japan quake could be the costliest

Posted On Mon, March 14, 2011

After Friday's 8.9-magnitude earthquake that leveled hundreds of thousands of residences, leaving thousands more homeless, the Insurance Information Institute is projecting it may be the world's costliest earthquake ever.

"The Japanese non-life insurance industry is very large - third only to the U.S. and Germany - with $107 billion in premiums written in 2009," said Robert Hartwig, economist and president of III. "The implication is that a larger share of losses are likely to be retained by domestic Japanese insurers and reinsurers than was the case with recent earthquakes in Chile and New Zealand."

Hartwig went on to say that III will be "an economic first-responder" in helping the Japanese people recover from their losses.

According to the III, the earthquake that struck Northridge, California, in 1994 remains the home insurance industry's costliest earthquake, totaling $15.3 billion, or $22.5 billion in 2010 dollars. Despite the devastation, the fatalities were relatively few at 61. Nearly 1,600 are confirmed dead and thousands are missing in Japan.

Since the original quake, Japan has received hundreds of aftershocks - many in the 6.8-magnitude range - which will likely further increase home insurance costs. 

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