Global insurance industry feels Japan tremors

The Canadian insurance industry is closely watching events unfolding in the wake of Friday’s earthquake and tsunami in Japan that caused colossal damage to life and property.

Global reinsurance giant Swiss Re said in a statement Monday that the company is still evaluating its exposure. Earthquake shock and tsunami coverage for residential insurance policies is generally covered by government insurance, not the private market. However, primary insurers generally cover residential and commercial fires following earthquake and tsunami losses.

According to a report by Credit Suisse the cost of initial insurance may range between $10 billion and $50 billion. With the cost of tsunami-related carnage added to the bill, the tab of the global insurance industry could rise above $60 billion dollars, as estimated by Panmure Gordon & Co. in London.

To put a perspective on it, this cost is almost as much as the entire worldwide catastrophic loss for the global insurance industry in 2010, according to an estimate released by Boston-based AIR Worldwide.

This year alone, the global insurance industry has incurred losses of between $8 billion and $10 billion on account of unrest in the Middle East, made only worse by another $10 billion hit as the result of the earthquake in New Zealand.

The total reconstruction tab for Japan is estimated at a staggering $180 billion.

There have been no confirmed reports of any material damage to Canadian insurance companies with operations in Japan. Laurie Lupton, spokesperson for Manulife Financial, confirmed that customer service at Manulife’s Tokyo operations was not affected.

“What I can tell you is our offices in Tokyo were safely evacuated and at this time we know that all of our employees and agents are safe.”

Lupton said the company is monitoring developments closely and that “we don’t anticipate this event will have a material impact on earnings this year.” Manulife has two offices in Japan, both in Tokyo.

Sun Life has operations in Tokyo through MFS Investment Management, which reports that its 27 employees were not harmed and its offices did not suffer major damage in the earthquake.

Several major Canadian financial services firms, including insurers and banks, have announced donations to the aid efforts in Japan.