Earthquake premiums gets first hike in 18 years

Japan: Non-life insurers in Japan are set to raise their earthquake insurance premiums by an average of 15.5 percent today, the first hike in 18 years.

The increase comes as estimates on damage from powerful earthquakes that were revised following the magnitude-9 quake and subsequent tsunami that struck the Tohoku region in March 2011, reported Jiji Press. Still, a further premium hike will be inevitable as the revised quake damage estimates do not take into account a possible huge earthquake that is seen occurring in the Nankai Trough off Japan’s Pacific coast, an executive of a major nonlife insurer said. Earthquake insurance, covers damage to housing and household goods from earthquakes and such relevant disasters as tsunami and volcanic eruptions. Quake insurance premium rates are decided on a prefecture-by-prefecture basis depending on the degree of danger, including the chance of an earthquake.

In Tokyo, for example, premiums for a one-year contract that would pay JPY10 million in benefits will rise by JPY3300 (USD33) to JPY20,200. Meanwhile, non-life insurers will expand premium discounts for buildings that are highly resistant to earthquakes.