Risk Management Solutions, Inc. (RMS) released the findings of an in-depth study that provides life and personal accident insurers in Japan with key benchmarks for the potential risk of human casualties from catastrophic events.
The RMS study, "Catastrophe Mortality in Japan: The Impact of Catastrophes on Life and Personal Accident Insurance," examines scenarios that would cause over 10,000 fatalities -- representing a 1% increase in annual mortality -- in the categories of infectious disease, earthquake, tsunami, and terrorism. This is the most extensive analysis to date of potential catastrophe risk in Japan for these segments of the insurance industry.
"Japan has the largest life insurance industry in the world. While it has rarely faced losses on the catastrophic scale confronted by property insurers, large losses are clearly possible and, as some argue, inevitable in the longer term," said Hemant Shah, president and CEO of RMS. "Our hope is that this study will improve the understanding of the potential risk from human casualty in Japan and lead to the reduction of casualties from future catastrophes through increased awareness, preparedness, and mitigation."
Infectious disease currently ranks third after cancer and heart disease as the primary cause of death in Japan. Given current heavy travel volumes and open borders between countries, a disease originating anywhere in the world can spread quickly into susceptible populations in many countries. A new mutation of the influenza virus is particularly feared within the scientific community, and countries neighboring Japan are the likely source of an outbreak.
For this study, RMS looked at the scenario of an influenza virus mutation developing into a pandemic and spreading through many cities in Japan despite stringent response measures implemented by the government. The pandemic scenario in Japan results in an estimated 24 million people requiring medical treatment and 500,000 deaths. The deaths result in group life and individual life insurance payouts totaling $58 billion.