Understanding Earthquake Insurance In Japan: How To Claim After Quakes – The costliest natural catastrophe of all time: The 2011 Tohoku earthquake caused the Fukushima nuclear disaster in Japan
Earthquakes are the deadliest natural hazard and cause extreme damage. They are impossible to predict and warnings come only moments before the shock waves arrive. The focus of prevention must therefore be on earthquake-resistant buildings and infrastructure, which offer the best possible protection to human life.
Understanding Earthquake Insurance In Japan: How To Claim After Quakes
More than 90% of all earthquakes occur in regions where large tectonic plates meet. Many active volcanoes are also located along these faults. In convergent zones, oceanic plates slide under continental plates. This is called a subduction zone, for example off the Pacific coast of South America or off Japan.
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In the case of transform faults, on the other hand, tectonic plates slide past each other horizontally. An example of this is the San Andreas fault in California. In Turkey, the Eurasian and Arabian continental plates are slowly pushing the Anatolian plate to the west – this is what caused the recent series of earthquakes in the region.
Convergent zones produce the strongest earthquakes (Chile, 1960; Sumatra, 2004; Japan, 2011), followed by transform zones (San Francisco, 1906; Turkey, 2023) and divergent zones. The hypocenter of earthquakes on convergent plate boundaries is often in the ocean. However, they pose a significant risk of tsunamis.
The losses generated by an earthquake are determined not only by the earthquake parameters themselves (magnitude, distance, duration) and the local subsoil conditions, but also by the structure of the affected buildings. The February 2023 earthquake in Turkey again demonstrated the vulnerability of the region’s building stock.
Stronger earthquakes also often cause knock-on effects with high loss potential. These include tsunamis, like the one caused by the 2004 Sumatra earthquake, with around 200,000 deaths, or by the 2011 earthquake off the coast of Japan. They can also cause landslides, subsidence and ground liquefaction, often with extremely high property losses.
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The most important loss prevention measure is the solid and robust construction of buildings and infrastructure, so they can withstand the enormous forces of strong earthquakes. This is usually regulated by national building codes, which often only apply to new builds. The main purpose of such building codes is to protect human life. They ensure structural stability while accepting that some property damage may occur. However, the new generation of building codes, such as those in use in the United States, Japan and New Zealand, try to reduce property damage. Planning measures such as deliberately avoiding highly exposed areas are often ignored, though.
There are many areas with high concentrations of values and population that are also located in zones of very high seismic activity. For the insurance industry, the possible loss accumulation in such areas has proven to be a key challenge. This makes it all the more important to be able to assess earthquake risk very accurately. Only on this basis can premiums for any insurance cover correctly calculated and risks managed. Insurers also contribute to reducing losses when, for example, they insist on structural improvements or land-use restrictions before underwriting risks.
Earthquake insurance is usually sold as an add-on to traditional fire cover or as a component of an EC (extended coverage) policy. Substantial deductibles are intended to limit loss accumulations and are a prerequisite for covering earthquake risks. Compared to windstorm cover, the insurance density of earthquake cover is – much like flood cover – relatively low in global terms.
Poor countries in particular require a massive increase in earthquake insurance in order to reduce the personal financial impact of earthquakes and speed up reconstruction. One model could be the Turkish Catastrophe Insurance Pool (TCIP), which, like compulsory homeowners insurance, should cover a substantial proportion of the damage to buildings caused by the recent earthquake in Turkey. Since the TCIP was established, the market penetration of homeowners insurance against earthquake damage in Turkey has increased nationwide to more than 50%.
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Nevertheless, the purpose of such insurance pools is to achieve an even higher insurance penetration through suitable provisions. With its expertise, the insurance industry can also help ensure that loss mitigation measures are implemented and enforced.
Since 2007, Munich Re has also supported the Global Earthquake Model (GEM), a joint initiative of leading geo research centers, the private sector and international organizations. Its main objective is to create a risk model for each country, thus making it possible to evaluate loss potential and the benefits of loss prevention measures, and ultimately increase insurability.
Munich Re systematically records the risks of earthquakes and works on initiatives to make buildings and infrastructure more robust. At the same time, the financial protection of people can be improved by the expansion of insurance, especially in exposed emerging and developing countries.
Benefit from our decades of experience in assessing geophysical risks. Munich Re can offer solutions to meet your specific challenges.
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This copy is for your personal, non-commercial use. For high-quality copies or electronic reprints for distribution to colleagues or customers, please call UK Support +44 (0)20 3377 3996 / APAC Support on +65 6508 2430 In Japan, we have been working on earthquake countermeasures for buildings for many years based on Past earthquake experiences. Currently, huge earthquakes such as a Nankai Trough Earthquake and Tokyo Inland Earthquake are predicted over Japan. The Japanese government promotes earthquake-resistant housing and buildings as one of the ways to minimize their damage from such earthquakes that may occur. Here, we would like to look at how much earthquake-resistant buildings in Japan have progressed, and how much earthquake-resistant buildings have been effective in reducing damages in recent major earthquakes.
Looking at the data of the Ministry of Land, Infrastructure, Transport and Tourism from 2018, out of a total of about 53.6 million units, the earthquake-resistant houses are about 46.6 million houses, and about 7 million houses come with insufficient earthquake resistance, And the earthquake resistance rate is about 87%.
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The buildings constructed after 1982, under the “new earthquake resistance standards” based on Building Standards Act, are considered to be earthquake resistant. On the other hand, buildings built before 1981 were built according to the “old earthquake resistance standards” before the earthquake resistance standards were tightened, so the earthquake resistance is considered insufficient. But not all of them are dangerous, and of the 13.1 million buildings that were built under the old earthquake resistance standards, about 6.1 million buildings, whose earthquake resistance performance was confirmed to be sufficient by seismic diagnosis or that underwent seismic retrofitting work After the diagnosis, are earthquake-resistant.
Looking at detached houses and apartment buildings, of the total number of detached houses of about 28.8 million houses, about 23.2 million houses are earthquake-resistant and about 5.6 million houses are not sufficiently earthquake-resistant, resulting in an earthquake resistance rate of about 81 %. Of the total number of apartment buildings of about 24.9 million, about 23.5 million are earthquake-resistant, and about 1.4 million are insufficiently earthquake-resistant, resulting in an earthquake resistance rate of about 94%.
The Japanese government supports seismic diagnosis and seismic retrofitting of the buildings constructed according to the “old earthquake resistance standards”, with the goal of achieving an earthquake resistance rate of 95% by 2025 and mostly eliminating housing stock with insufficient earthquake resistance by 2030.
As indicators of earthquake resistance performance there are earthquake resistance standards and seismic grade. Here we would like to look at the acquisition status of Seismic Grade. It is one of the grades of the “Housing Performance Labeling System” based on the “Housing Quality Assurance Promotion Act (Housing Quality Assurance Act)” enforced.
