Verisk Estimates Insured Losses from Kumamoto Earthquake to Range Up to $2.1 Billion

Verisk (Nasdaq: VRSK), a leading strategic data analytics and technology provider to the global insurance industry, has released its initial estimates for insured losses stemming from the magnitude 6.8 earthquake that struck Japan's Kyushu Island on July 28. According to the company's Catastrophe and Risk Solutions group, insured losses are projected to be between JPY 220 billion (approximately USD 1.4 billion) and JPY 340 billion (approximately USD 2.1 billion). These figures account for insured physical damage to residential, commercial, industrial, and mutual property risks, including structures and their contents, before any potential recoveries under Japan’s comprehensive earthquake insurance program.

The earthquake, measured at Magnitude 6.8 by the U.S. Geological Survey (USGS) and 7.1 by the Japan Meteorological Agency (JMA), occurred at a shallow depth of approximately 10 kilometers south of Kumamoto City. The strongest shaking was recorded in Uki City and Hikawa Town. Initial reports indicate dozens of fatalities and hundreds of injuries, with hundreds of homes and commercial buildings damaged. Additionally, transportation networks, including highways, bridges, and rail infrastructure, sustained damage, and approximately 48,000 households experienced power outages.

Damage estimates from Verisk are predominantly attributed to ground shaking, with a smaller contribution from liquefaction. The estimates exclude losses to uninsured properties, infrastructure, automobiles, business interruption, and non-modeled perils such as landslides. Kumamoto, a significant manufacturing hub for Japan, saw several semiconductor, electronic, and automotive facilities temporarily suspend operations for safety inspections and damage assessments following the quake. This has raised concerns about potential disruptions to global supply chains.

This recent seismic event follows a major earthquake in the same region in 2016, which registered a magnitude of 7.0 and resulted in approximately USD 5.9 billion in insured losses. Analysts anticipate that the insured losses from the 2026 Kumamoto earthquake will be lower than the 2016 event and more aligned with the 2024 Noto Peninsula earthquake, for which Verisk estimated losses between USD 1.8 billion and USD 3.3 billion. Japan maintains a robust earthquake insurance system, with residential claims largely supported by a government-backed reinsurance program.

Market experts foresee a limited impact on the earnings and overall capital of Japanese property and casualty insurers, primarily due to the government's reinsurance backing for residential claims and cautious underwriting practices for commercial losses. The event is also not expected to significantly impact the catastrophe bond and insurance-linked securities (ILS) market, although some ILS managers, such as Euler ILS Partners, have estimated total industry losses could reach between USD 3 billion and USD 4.5 billion. The Japan Meteorological Agency continues to warn of ongoing aftershock risks, urging residents to remain vigilant for further seismic activity.