Japan – earthquake restoration fallout

In the insurance world, every incident of damage is followed by a restoration and repair process.  Japan’s recovery from the March 11 earthquake and tsunami – and subsequent nuclear malfunction – while on a massive scale, is essentially no different.

But 2 colossal hurdles are impeding progress:

1)     the first is financial: who is going to pay for the damage, and how is that funding sourced?  As indicated in The Risk Factor (March 28^th), it appears that a relatively small portion of Japan’s loss is insured (roughly 10%), and of that a smaller portion still is carried by insurers outside the country.

Prior to the disaster, Japan’s debt-to-GDP ratio was nearing alarming levels (over 100%) leading many to question how the nation will pay for the repairs: much is uninsured, and for that covered by Japan’s own insurance industry, the financial burden is increased as the government itself is acting as a financial backstop.

2)     but a second hurdle is causing immeasurable aggravation: within the first 5 weeks, over 820 aftershocks have hampered restoration efforts.  And because of the intensity of this seismic activity – 57 have been measured at 6.0 or greater – buildings, roads, bridges, and telecommunications infrastructure that have already been repaired have been threatened with further damage.  Can you imagine the frustration – plus delay and additional expense – of having your home repaired, only to have to start again due to subsequent seismic damage?

The following interactive display demonstrates graphically, the hundreds of aftershocks emanating from east of the island nation in the 5 days after the main event:

http://www.msnbc.msn.com/id/42037498/ns/world_news-asia-pacific/

Tags: claims, coverage, damage, disaster, earthquake, environment, insurance, japan, risk, safety