(Bloomberg) -- The earthquake that struck Nepal caused about $2 billion in economic losses in the country, and only a fraction of the cost will be incurred by insurers, according to Kinetic Analysis Corp.
Damage in India could cost an additional $800 million, according to figures from the disaster-modeling firm that include property damage and long-term business-interruption costs. Less than 1% of the losses are covered by insurance, according to Kinetic’s initial data from the main quake. The estimates exclude costs for immediate needs such as food.
“Most developing countries just don’t really have mature insurance industries,” Chuck Watson, Kinetic Analysis’s director of research and development, said in a telephone interview Monday. “It’s getting by day-to-day. They’re not really concerned with things like insurance.”
The magnitude 7.8 earthquake Saturday and aftershocks killed more than 3,700 people and displaced millions from their homes. Nepal has a gross domestic product that is smaller than any of the 50 U.S. states. Its 28 million people have the lowest spending power of any Asian country apart from Afghanistan, International Monetary Fund statistics show.
“I suspect this tragic event will perpetuate the fact that preparedness, let alone insurance penetration, was woefully low,” Julian Roberts, lead partner at the strategic risk consulting practice at insurance broker Willis Group Holdings Plc, said in an e-mailed statement. “We’ll probably find that there was more insurance carried by the tourists and expat community out there than all the Nepalese combined.”
--With assistance from Unni Krishnan in New Delhi and Anto Antony in Mumbai.
Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.