Insured Loss Estimates from Japan Earthquake Range from $1B to $6.4B

Insured losses from the devastating earthquake in Japan could reach $6.4 billion, according to an estimate from U.S.-based catastrophe modeling firm Karen Clark & Co (KCC).

Losses from residential properties account for more than two thirds of the total, according to KCC, as most commercial and industrial buildings in the affected cities are more seismic-resistant because of their predominantly steel construction.

The quake struck western Japan’s Noto peninsula on the afternoon of New Year’s Day, flattening homes, triggering a tsunami and cutting off remote communities.

The death toll from the disaster is nearing 100, and the United States said on Friday it is preparing military logistical support and aid.

CoreLogic reported on Friday that insured losses from damage caused by the earthquake and fires that followed, in addition to tsunamis and liquefaction were estimated to range from $1 billion to $5 billion.

The loss estimate includes damage to buildings and their contents, as well as business interruption and costs associated with additional living expenses, the company said in a report by Jon Schneyer, director of catastrophe response. The estimate does not include damage to government property, infrastructure such as road and rail networks, water and electric power systems or oil and gas pipelines.

CoreLogic said initial reports from Japan indicate there was material damage in the smaller towns and cities near the Noto Peninsula, such as Wajima and Suzu. The Mayor of Suzu said that over 90% of the 5,000 homes in the city may have been damaged or destroyed, the report says. However, the earthquake spared major economic centers like Tokyo, reducing the loss potential from this event.

The US Geological Survey reported violent ground shaking with intensity of IX on the Modified Mercalli Intensity Scale in cities closest to the epicenter, CoreLogic said. Shaking at that intensity is capable of heavy damage. Shaking intensity as high as VI was reported in Kanazawa, the largest city nearest to the epicenter.

As of Jan. 2, the USGS recorded more than 40 strong aftershocks, with intensities ranging from Mw 6.2 to Mw 4.1.

Top photo: Snow falls as rescuers conduct a search operation around a burnt market in Wajima, Ishikawa prefecture, Japan Sunday, Jan. 7, 2024. A major earthquake slammed western Japan on Jan. 1, killing scores of people, toppling buildings and setting off landslides. (Kyodo News via AP)