Reinsurance

The Japan earthquake and tsunami revealed a potential flaw in catastrophe modelers' planning, as modelers pointed to the fact that they did not account for the complete devastation that hit the island nation.

A change to a catastrophe model can influence the level of reinsurance purchased by companies and impinge on the rating process, but the extent to which the latest revision announced by one modeler affects either is not specifically clear.

Two insurance and reinsurance companies have provided loss estimates for the February 2011 New Zealand earthquake, with both companies basing their individual losses on expected industry losses upward of $12 billion.

The private insurance market is likely not heavily exposed to damage at nuclear reactors in Japan resulting from the 9.0 magnitude earthquake and subsequent tsunami.

Net premiums among 19 U.S. property and casualty reinsurers fell about $600 million in 2010, according to the Reinsurance Association of America.

The insurance industry is just beginning to grasp the consequences following the massive earthquake and tsunami in Japan late last week, with one catastrophe modeler estimating insured property losses at $35 billion.