Japan Life Insurance Companies Expect Moderate Losses
The devastating earthquake and tsunami that occurred earlier this month in Japan is expected to cause over 18,000 deaths and many more injuries. This massive loss of life and property is expected to cost $10 billion to $60 billion for insurance companies across the world according to the article "Moody's: Japan Losses for Life Insurers Moderate" found on Business Week's website.
Moody's Investors Service released a report earlier this week which said it didn't expect to downgrade ratings of life insurance companies with operations in Japan. Revenues will of course be decreased from the influx of payouts for death, accident and health benefits, but the additional claims are considered manageable considering earnings and capital strength.
This is expected to be the most expensive catastrophe since Hurricane Katrina in 2005 and costs are only increasing as Japan continues to experience aftershocks and factories continue to shut down. Moody's report also says that although some life insurance company operations in northeastern Japan have been devastated by the earthquake, most primary operations are still in tact and managing well.
Moody's Senior Credit Officer, Neil Strauss, says the Japanese life insurers with the largest shares in the domestic market will suffer the biggest impact, rather than international companies that operate in Japan. The US insurer, Aflac, which sells health and life insurance to about 25% of the Japanese population, says claims will be high but they are prepared to cover them which is great news for not only the market, but for the thousands of beneficiaries who need these claims to be fulfilled quickly.