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Earthquake Insurance in Japan

Published online by Cambridge University Press:  29 August 2014

Masao Wakuri  and
Yasuyuki Yasuhara
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Japan is one of the most earthquake-prone countries in the world and a considerable volume of earthquake insurance is written by private insurers. Therefore, a report on earthquake insurance in Japan has been prepared for the 13th ASTIN Colloquium.

We will first summarise, from recent results of seismological studies, the matters which would form the basis for a study of earthquake insurance, and then explain how this insurance actually works in Japan.

Type
Research Article
Information
ASTIN Bulletin: The Journal of the IAA , Volume 9 , Issue 3 , December 1977 , pp. 329 - 364
Copyright
Copyright © International Actuarial Association 1977

References

page 332 note (*) Magnitude is the common logarithmic expression of the maximum amplitude in micron (1/1000 mm) recorded by a standard seismograph with a periodicity of 0.8 seconds, attenuation constant of 0.8 and magnification of 280, located 100 kilometers from the epicentre.

It is commonly understood that the following empirical formula holds good between the magnitude (M) and the energy (E) of seismic waves.

log10E = 11. 8 + 1.5 M

According to this formula, the energy increases approximately 31.6 times for each 1 point's increase of the magnitude.

A certain constant relationship is observed by experience between the magnitude and the scale of faults formed by the earthquake. Generally, the length of faults is more than 100 kilometres at M8, around 10 kilometres at M7 and around 1 kilometre at M6.

page 348 note (*) This method is the same as that used for calculating the direct premium rate of this insurance. It might be added that, in the actual calculation, the above “expected claims amount” is increased by 5% (See Formula 14 at page 363).

page 355 note (*) “Seismic intensity” is a measure indicating the intensity of vibration or tremor at a given place. It differs from “magnitude” which represents the size of the earthquake itself.

page 358 note (*) “Seismic coefficient” K is the ratio of the maximum acceleration (cm/sec2) of the earthquake at a given place to the acceleration of gravity (980 cm/sec2).