KCC cat model estimates $1.5 trillion losses if Kanto-strength earthquake hit Japan today
An earthquake model has estimated the value of insured and uninsured losses if a catastrophe akin to Japan’s 1923 Kanto megathrust earthquake hit the country today.
The major quake, which occurred off the south eastern shore of Japan, violently shook Tokyo and Yokohama in 1923 and has been estimated to be of a magnitude strength between 7.9 and 8.3 and at a depth of approximately 23 km.
Catastrophe risk modelling and management consultancy Karen Clark & Company (KCC) used its Japan Earthquake Reference Model to estimate that a similar event today would result in more than $1.5 trillion in total losses (insured and uninsured).
Previously it has been difficult to model loss values as a hotchpotch of different building construction types and occupancy levels have evolved in response to building regulation updates made in the wake of successive earthquakes.
To remedy this, KCC’s model incorporates a high-resolution database of residential and commercial property values to reflect the proportion of buildings estimated to fall within each occupancy and construction type.
The consultancy said: “The same region is susceptible to larger magnitude events. A larger magnitude event impacting the same region could cause over $3 trillion in total property losses."
In its whitepaper ‘Quantifying and managing Japan earthquake risk', the firm said the Kanto event “has an estimated return period of 200 to 300 years”.
The paper added: “Along with major subduction zone events, smaller crustal and background events can occur anywhere in Japan, causing significant losses to re/insurers. For modelling background events, scientists have divided Japan into multiple regions, and each region has its own Magnitude Frequency Distribution for defining background events.”
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