Sompo Japan Nipponkoa Insurance will compute corporate earthquake insurance premiums to 948 areas nationally instead of by prefecture. This change will likely make cover more expensive in coastal areas vulnerable to tsunamis, while lowering premiums for inland regions.
The revision may take effect in February 2017, and will apply to any new and renewed policies during that month.
The change was made in response to the disparate risks affecting various regions, even at the prefectural level. The risks of building destruction, fires, tsunamis and other quake-related hazards are not uniform even within prefectures. The new 948 areas will correspond to postal codes.
According to the insurer, around 40% of businesses will have to pay higher premiums, but the remaining 60% will have lower rates.
The insurer will cooperate with the National Research Institute for Earth Science and Disaster Prevention and other groups in formulating a new proprietary risk model. The height and speed at which waves hit a building will be factored in with regard to tsunamis.
The materials and techniques used in buildings will also be taken into account. Structures made of reinforced concrete will have roughly 20% higher rates due to high repair costs. Meanwhile, buildings made of steel frames or wood will have lower premiums by around 15%.
RELATED LINKS:
Japanese insurer Sompo speaks out on $6.3 billion mega deal
Japan hit by magnitude 6.0 quake
US$98bn in losses worldwide from natural hazards for first half of 2016
