In July 2014, Japan introduced the first increase in earthquake premiums in 18 years. Now, a group commissioned by the Japanese Ministry of Finance to study the issue has announced that insurance companies could add another 19% increase in earthquake premiums by January 2017 as they reassess risk following the magnitude 9 earthquake in March 2011.
After the March 11th earthquake and subsequent tsunami, insurance companies in Japan had to pay a $1.2 trillion yen bill, which far surpassed the previous record of $78.3 billion yen paid out after the 1995 earthquake in Kobe.
Earthquake insurance rates are established by regional hazard maps which are published annually by the Headquarters for Earthquake Research Promotion.
The request premium hikes have been confirmed by the General Insurance Rating Organization of Japan, who represents some of the largest insurers in Japan.
Professor Hiroyuki Fujiwara of the National Research Institute for Earth Science and Disaster Prevention is a member of the group that draws up the hazard maps. Fujiwara predicts that there is a 70% chance of a magnitude 7 earthquake near Tokyo within the next 30 years, but says that the premium increases are affected because in an attempt to improve their predictions experts are now trying to model potential earthquakes in areas where they’ve never before been considered.