Event: Great Hanshin earthquake, 1995
Location: Kobe, Japan
Economic cost: $150bn, two-thirds in infrastructure and property damage and one-third in economic disruption.
Description: A magnitude 6.9 earthquake struck 20 kilometres from the city of Kobe, 16 kilometres below its epicentre, on 17 January 1995.
Damage: More than 6,400 people died and 15,000 were injured. Around 82 hectares of urban land was devastated by fire. The city’s subway system and stations were damaged, along with 400,000 buildings, and its supply lines interrupted by damage to regional trunk roads, monorails, railway lines and stations. Liquefaction wrecked all but six of the 187 shipping berths in Kobe’s container port.
Insight: Domestic insurers covered about $3bn, and the international market a similar value in claims from shipping, business interruption and stock losses. The government paid more than $780m in residential claims, as Kobe had less earthquake cover than other major Japanese cities. Many of the remaining claims related to commercial properties owned by multinationals. Most of the damage affected property built before seismic safety standards for construction were introduced in 1981. After Kobe, some older buildings were required to have remedial strengthening work, and investors have demanded even higher building standards. Risk modeller AIR Worldwide has estimated that if a similar incident occurred today, insured losses would be $5.9bn and insurable losses $26bn.
Insurance solutions: The Lloyd's market offers cover in relation to Earthquake. Examples of this include but are not limited to: Commercial and residential property, property catastrophe re/insurance, insurance linked securities (including collateralised catastrophe reinsurance and catastrophe bonds), workers' compensation, business interruption and contingent business interruption.
Image: Buildings in Kobe destroyed by the Great Hanshin Earthquake (Getty Images)
Sources: AIR Worldwide; RMS
