Industry losses from the recent magnitude 6.8 earthquake that struck Kumamoto Prefecture are expected to be relatively lower than the devastating 2016 Kumamoto quakes, which caused US $53 billion in economic and $7.7 billion in insured losses, according to broking group Aon.
We recently reported that Euler ILS Partners, the Zurich-based specialist investment manager, had estimated that the insurance industry loss from this event could fall between US $3 billion and $4.5 billion.
In its weekly cat report, Aon said the powerful earthquake that struck southern Japan in late July resulted in at least 35 fatalities and hundreds of injuries, while causing significant property and infrastructural damage across several prefectures.
“Tens of thousands of properties were likely damaged, although the full assessment of impacts will continue in the coming weeks,” Aon said.
According to the United States Geological Survey (USGS), the main seismological event occurred in the afternoon of local time on July 28th in a shallow depth of approximately 10 km (6.2 miles) with the epicenter located east of the city of Uto in Kumamoto Prefecture, and had a moment magnitude of 6.8.
Subsequent notable aftershock activity was recorded, comprising at least 194 tremors with a magnitude of 1 or greater on the Japan Meteorological Agency (JMA) scale. Significant ground deformations were also observed, including an 87cm shift to the northeast that was recorded in Yatsushiro.
Aon also explained in its cat report, that a governmental panel of experts determined that the earthquake originated from a segment of the Hinagu fault zone, extending approximately 30 km along the boundary. This same fault line was involved in the significant Kumamoto earthquakes that occurred a decade ago in April 2016.
“The event reached the highest, 7th intensity level on the Japan Meteorological Agency (JMA) seismic intensity scale in the city of Uki and the town of Hikawa, with intensities of 6 recorded in surrounding municipalities including parts of Kumamoto City, Yatsushiro, Uto, Misato and Mashiki,” Aon added.
As of July 31st, at least 35 fatalities have been confirmed, while hundreds of people were reported injured across the affected area, with the toll expected to evolve as rescue operations continue.
Aon also noted that several fatalities were related to the partial collapse of the Aeon Mall in Kashima and a subsequent explosion that took place roughly 80 minutes after the tremor. Eight people were also killed by a collapse of a chimney in a paper mill factory in Yatsushiro.
The broker also highlighted that infrastructure and property impacts from the event have been significant, with nearly 50,000 households in Kumamoto Prefecture experiencing power outages shortly after the quake, while more than 100,000 customers remained without water two days after the event.
As well as this, rail services, including sections of the JR Kyushu network and some Shinkansen operations, were suspended pending safety inspections.
“As of 30 July, authorities had not fully quantified the scale of property damage, but reports indicate widespread damage to residential and commercial structures, as well as industrial facilities, in the worst-hit areas,” Aon explained.
The broker also cautioned that there is a small possibility that there may be some additional effects from Super Typhoon Dolphin late next week, which could potentially trigger heavy rainfall, flash flooding and secondary landslides in the affected areas, with the storm currently likely to track south of Japan towards the East China Sea.
“While rescue operations and damage assessment continue and the risk of potential aftershocks persists, it is likely that the event will result in significant economic and insurance industry impacts. Initial expectations suggest that there will be relatively lower damage compared to the devastating series of tremors a decade ago. The 2016 Kumamoto earthquakes resulted in $53 billion in economic and $7.7 billion in insured losses (in 2026 USD),” Aon added.
Also read:
– Japan quake: ILS managers see minimal loss potential. Euler estimates $3bn-4.5bn insured.
– Japan quake impact on cat bonds, private ILS not expected to be material: Twelve Securis
