Did you know that AFLAC generates 75% of its revenue from Japan? Gilbert Gottfried must know that now. The voice of the AFLAC duck in its U.S. commercials was fired this week after insensitive comments he made about Japan's tragedy on Twitter. This article in the DRI Voice discusses some of the pitfalls of social media like Twitter.
The total cost of the earthquake damage could be between $100 billion and $190 billion (estimates from Eqecat, the catastrophe modeling firm and Barclay's Capital respectively). However, because most earthquake risk in Japan is covered by the government, insurance losses are likely to be in the range of $12-25 billion. For comparison, Hurricane Katrina caused total losses of $125 billion, of which $62.2 billion was insured. The 1995 earthquake in Kobe caused economic losses of more than $100 billion, but only $3 billion was insured loss. That area was not considered earthquake-prone, so earthquake coverage was less prevalent than in other areas. But that catastrophe did increase the rate of coverage.
The Wall Street Journal reports that insurance claims related to the disaster in Japan will be generated far from the island-nation. They quote Rod Fox of reinsurance broker TigerRisk that the disaster will "have far-reaching effects, and the business interruption claims can mount very quickly." Already ON Semiconductor has reported that they are "working with [their] insurance carriers to assess and recover incurred losses from business interruption, supply chain disruption and property damage..."
Our hearts go out to everyone affected by this catastrophe in Japan and we'll be seeing these issues for some time to come.