Insurance claims from this week’s earthquake in Japan may top the 175 billion yen ($1.1 billion) average for the country’s six previous major tremors, Bloomberg Intelligence estimated.”
We estimate industry-wide insurance claims could reach the low hundreds of billions of yen,” BI analyst Steven Lam said in a report.
Most of the exposure from the July 28 quake in Kumamoto is tied to commercial properties, as well as residential coverage under Japan’s earthquake insurance system, he said.
Japan’s three major private insurers — Tokio Marine Holdings Inc., Sompo Holdings Inc. and MS&AD Insurance Group Holdings Inc. — have budgeted a combined 365 billion yen for domestic natural catastrophe claims this fiscal year, more than twice their combined claims in the prior year. Their share of the latest claims could amount to less than 1% of adjusted profit after reinsurance recoveries and taxes, BI estimated.
The magnitude 7.1 quake has killed 30 people, including some still being assessed for links to the temblor.
“I know they lied about that,” Reina said. Because few, if any insurers will even think about writing a place that mixes firearms with alcohol sales. Reina’s group also decided to take a pass on writing the establishment.
In another recent example, Reina said he drove two hours one night—unannounced—to check out an applicant’s bar in upstate South Carolina. He sat at the bar, had a beer, then heard a young man next to him order 10 “jello shots” for a dollar each. Reina knew that the bar’s insurance policy carried an exclusion that barred coverage if drinks are sold at such low prices.
“I knew then that I was done and we couldn’t cover them,” Reina added.
Most importantly, Reina and associates spend time talking to other bar owners and managers in the same city as a prospective bar policyholder. Those conversations can provide valuable intel about an establishment’s habits, history and permissiveness, he said.
Another trick: Ragnar Insurance takes a hard look at bathrooms. If they’re clean, that gives an idea that the owner is keeping his or her eye on things. “If they’re not paying attention to that, they’re probably not paying attention to other things,” Reina said.
In an age of increasing customer use of direct-to-carrier coverage, online price quotes and more and more use of artificial intelligence in the insurance industry, Reina’s team believes the hands-on human approach is really the only way to write liability coverage.
So far, the approach seems to be gaining steam. The captive has obtained reinsurance from Gen Re, the multinational reinsurance firm, and Ragnar has signed up 39 establishments for coverage. Most of those have obtained the required level of coverage at much lower premiums, the group explained. For one place, the best quote the owners could find from admitted insurance carriers was $42,000 a year, on $1.5 million in sales.