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Natural Catastrophe Risk Management Policy in Japan Hirokazu Tatano Disaster Prevention Research Institute, Kyoto University Global Conference on Insurance and Reınsurance for Natural Catastrophe Rısk : The Role of Public-Private Partnerships December 8–9, 2005 Natural Disaster in the World

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natural catastrophe risk management policy in japan

Natural Catastrophe Risk Management Policy in Japan

HirokazuTatano

Disaster Prevention Research Institute, Kyoto University

Global Conference on Insurance and Reınsurance

for Natural Catastrophe Rısk:The Role of Public-Private PartnershipsDecember 8–9, 2005

contents
Natural Disaster in the World

Natural Disaster in Japan

Weather Related Disaster Risk Management

Risk Control Policies

Risk Financing Policies

Earthquake Disaster Risk Management

Risk Control Policies

Risk Financing Policies

Discussion & Conclusion

Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Contents
great natural disasters in the world
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Great Natural Disasters in the World

Source: Munich RE. 2005

economic losses and insured losses with trend
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Economic losses and insured losses with trend

Source: Munich RE. 2005

slide5
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Trend of Natural Disaster in the world

  • Larger catastrophic disaster is more likely to occur.
    • Number of Disaster for which some international aid is executed.
    • 60s:90s=1:3
  • Economic losses glowed in high rate
    • 60s:90s= 1:9
  • Insured losses increased in higher rate
    • Anti-catastrophe insurance available in high-income countries
    • 60s:90s =1:16
slide6
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

What is happening?

  • Increase in exposure : Population and assets are concentrating to hazardous area
  • Vulnerability : Population and assets have not enough resistance against natural hazards
slide7

Vulnerability: degree of resistance of the asset & population against disaster

Population

& Asset

Exposure:population and asset exposed to the threat of natural hazards

Hazard:Flood, Earthquakes,etc

Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Natural Hazard →Disaster

Consequencesof

Human Behavior

urban population is dominating in the world
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Urban population is dominating in the world

http://www.faculty.fairfield.edu/faculty/hodgson/Courses/so11/population/urbanization.htm

higher vulnerability in less income countries
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Higher vulnerability in less income countries

Large natural disasters over period 1980- 2005

Source: Munich Re. 2005

slide10

Proactive CounterMeasuresofDisasterRisk Management

Benefit of Mitigation can be different. It depends on the possibility of risk transfer [ Kobayashi & Yokomastu 2000].

Needs for integration

Combination of Risk control and financing measure is important!

Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

smaller insurance coverage natural disaster losses in lower income countries
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Smaller insurance coverage natural disaster losses in lower income countries

Large natural disasters over period 1980- 1999

Source: Munich Re. 2003

proactive risk financing is less used in developing countries
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Proactive risk financing is less used in developing countries

Source: Warner 2005.

current and ideal disaster risk management counter measures in developing countries
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Current and ideal disaster risk management counter measures in developing countries

Source: Warner 2005.

observations and issues
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Observations and Issues
  • Disaster related losses are increasing in the world.
  • Less developed countries are more vulnerable and have less insurance coverage.
  • Proactive disaster risk management is ideal but difficult in practice in developing countries.
  • How can we overcome such problems?
  • Japanese experience
natural disasters in japan

Natural Disasters in Japan

A Natural disaster-prone country

japan a disaster prone country
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005JAPAN: A Disaster-Prone Country
  • Japan covers only 0.25% of the land area on the grove, the number of earthquakes and distribution of active volcanoes is quite high.
  • 20% of earthquakes with magnitude of 6.0 or larger were occurred in Japan.
  • 10% of active volcanoes is located in Japan.

Number of active volcanoes

Number of earthquakes with magnitude of 6.0 or larger

epicenters of earthquakes which were magnitude 4 0 or above from 1980 to 1996
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Epicenters of Earthquakes which were magnitude 4.0 or above from 1980 to 1996

International Seismological Centre

the number of deaths and missing in natural disasters in japan
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005The Number of Deaths and Missing in Natural Disasters in Japan

Tonankai quake

Hanshin-Awaji earthquake

Fukui quake

Typhoon

Ise-wan

Weather Related Disasters

amount of damage of facilities due to disasters

(billion Yen)

Annual Damage

Percentage in the GDP

Amount of Damage of Facilities

Percentage in the GDP

Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Amount of Damage of Facilities due to Disasters
disaster management policies

Disaster Management Policies

Earlier development

disaster relief act 1947
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Disaster Relief Act (1947)

Large Earthquakes struck Japan during 1940s.

Government’s relief policy was established

large scale flood disasters frequently happened from 1930s to 1950s

Year-Mon.

Cause

Death

Missing

Causality

1934.9

Muroto Typhoon

2702

334

14994

1945.9

Makurazaki Typhoon

2473

1283

2452

1947.9

Catharine Typhoon

1077

853

1547

1954.9

Toyamaru Typhoon

1361

400

1601

1959.9

Isewan Typhoon

4697

401

38921

Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Large scale flood disasters frequently happened from 1930s to 1950s.

http://www.ffortune.net/social/seso/nihon-mei/muroto-taihu.htm

high tide disaster by isewan typhoon in 1959
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005High Tide Disaster by Isewan Typhoon in 1959

http://www12.freeweb.ne.jp/photo/ajapskwn/saigai/p02.html

disaster management policy
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Disaster Management Policy
  • Needs for change of the policy

from reactive to proactive approach.

  • In 1961, the Disaster Countermeasure Basic Act was legislated.
disaster countermeasure basic act 1961
Disaster Countermeasure Basic Act (1961)
  • The immense damage caused by the Typhoon Ise-wan in 1959 was a turning point for disaster management, giving rise to a movement to plan and prepare a comprehensive disaster management system, and in 1961, the Disaster Countermeasures Basic Act was enacted.
  • Thereafter, the disaster management system has been improved and strengthened following the occurrence of large natural disasters and accidents.
change in disaster management related budget
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Change in Disaster Management Related Budget
changes in disaster management budget by category classification
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Changes in Disaster Management Budget by Category Classification
slide28
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Regional Disaster Prevention Plan

  • Triggered by Isewan disaster and enforced.
  • Every level of public sectors shall have a plan by disaster prevention basic act (legal duty).
  • A plan shall include long-term establishment plan on (1) forecasting system, (2) facilities for flood fighting, (3) warning criteria, (4) rescue system, and (5) communications in emergency.
the great hanshin awaji earthquake 1995
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005The Great Hanshin-Awaji Earthquake, 1995

Effective Disaster Response is required.

Rapid Response, Information systems, Crisis Management, etc

disaster management systems
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Disaster Management Systems
  • Organizational Change in the National Government
    • At the time of the reorganization of the Central Government in 2001, the Cabinet Office undertook the administrative duties for disaster management. The Director-General for Disaster Management is mandated to undertake basic policy making and planning, coordinate the activities of all ministries and agencies and respond to large-scale disasters. In addition, the position“Minister of State for Disaster Management” was newly established as the Minister State for Special Missions.
  • Disaster Information Systems
    • Disaster Management Related Communication Network

Etc.

disaster management radio communications system
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Disaster ManagementRadio Communications System
features of flood risk management in japan
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Features of Flood Risk Management in Japan
  • Intensive investment for structural counter measures of flood control
  • Comprehensive flood protection plan including structural and nonstructural flood protection
  • Widely disseminated comprehensive property insurance which is run by private insurance company
  • Weak public involvement and conflicts which highlights tradeoffs between environment and flood protection
  • Weak link to land-use policies

Complementarily between flood risk control and financing measures.

slide34

Flood Control (Structural) Measures

Storage enlargement and diversion

reservoir

levee

diversion

dredge

Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

slide35
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Rapid Industrialization and Urbanization in 1960s and 1970s

industrialization and urbanization
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Industrialization and Urbanization
  • Needs for Water Use
    • The River Act revised to aim not only at flood control but also at water utilization.
  • Needs for Flood Control
large scale construction of multi purpose dams
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Large-scale Construction of Multi-purpose Dams
  • In Japan as of 2000
  • 2,500 dams
  • 20 billion m3 capacity

Water supply purpose

Flood control purpose

http://www.ktr.mlit.go.jp/tonedamu/index.htm

slide38
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Results of Intensive Structural Flood Control

Accelerated increase in economic loss / area

Decrease in inundated area

land use planning and flood protection in tokyo

1882

37years past

1919

35years past

1954

42years past

1996

1930

1911

Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Land use planning(?)and Flood Protection in Tokyo

Construction of Edo-Gawa discharge channel

non structural flood control counter measures
Non-structuralflood control counter measures

Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Conservation of upper-stream basin

Radar

Flood fighting

Land use control/management*

Flood Hazard Mapping

H

Flood insurance

Forecasting and early warning

Retention ponds and infiltration

* Not working well in Japan

Flood-proofing

tsurumi river basin 235 km 2
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Tsurumi River Basin (235 km2)

Red= urban area

Dark green=forest

Light green=farm land

1948

Ratio of urban area =10 %

Pop.=0.49 mil.

1995

Ratio of urban area =83 %

Pop.=1.7 mil.

http://www.keihin.ktr.mlit.go.jp/TURUMI/masterplan/j1/j01gaiyo_gaiyo2_2.htm

slide42
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Comprehensive Flood Protection Plan:Immediate Target for Structural Countermeasure Development for Flood ProtectionIntroduction of Non-Structural Countermeasures

  • River channel capacity expansion up to 50mm/hr
  • Increase of Retention Capacity
    • Development of retention ponds/pools to mitigate the increased run-off is asked for when a urban development project is executed.
  • Public provision of flood hazard maps
flood risk financing
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Flood Risk Financing
  • Fire Insurance covers wind, hail and snow triggered disasters like storms and avalanches.
  • Comprehensive property insurance covers not only wind, hail and snow triggered disasters but also water related disaster like floods.
  • These insurances provided by private insurance companies.
comprehensive property insurance

100

80

60

Payout(%)

40

20

0

0

20

40

60

80

100

Loss ratio(%)

Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Comprehensive property insurance

● Storm

● Flood

100

75

50

Payout(%)

25

0

0

25

50

75

100

Loss Ratio(%)

total and insured losses of major weather related disasters in the past
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Total and insured losses of major weather-related disasters in the past

Source: EM-DAT 2005

the nagara river estuary barrage conflict
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005The Nagara River Estuary Barrage Conflict

The Nagara River flows out of the mountains of Gifu Prefecture in central Japan. For roughly a half of its 136-kilometer course, it runs south through narrow valleys. Then, flowing through high dykes, it makes its way across the Nobi Plain before emptying into Ise Bay, and into the Pacific Ocean.

  • Location

Nagara River Estuary Barrage

landslides hiroshima 1999
Landslides:Hiroshima(1999.6)

Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Death:27

Upper : http://www.chugoku-np.co.jp/News/990629_gouu/photo/2.html

Left: http://wwwsoc.nacsis.ac.jp/jsce2/report/02/01/sokuho.htm

improving flood risk management
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Improving Flood Risk Management
  • Weak public involvement and conflicts which highlights tradeoffs between environment and flood protection
    • New River Act (1997): Improving environment becomes one of the objects of river management. Public involvement becomes requirement for implementation plan.
  • Weak link to land-use policies
    • Partial improvement for landslide hazard: It becomes mandatory to explain landslide risk for sellers to buyers when real estate is in the dangerous zone against landslide hazard.
slide49

River Council

Master plan

Academic experts

Local residents

Authorization of the basic plan for the implementation of construction works

Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

New river act was legislated in 1997.

Old planning procedure

New planning procedure

Master Plan

Basic plan for the implementation of construction works

Details: Fundamental policy, design flood, design flood flow and others

Details

Fundamental policy, design flood, design flood flows and other details of the river works

Drafting of a fundamental river management policy

Procedure

Opinion

Authorization of master plan

Procedure

Development of a basic plan for the implementation of construction works

Implementation plan

Details: Details of river works and river maintenance

Procedure

Opinion

River Council

Opinions

Opinions

Drafting of implementation plan

Opinions

Heads of local public bodies

Authorization of implementation plan

Execution

Execution

earthquake risk management policies

Earthquake Risk Management Policies

Focusing on earthquake risk financing

distribution of the epicenters of earthquakes causing damage from 1885
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Distribution of the Epicenters ofEarthquakes Causing Damage (from 1885)
earthquake insurance in japan
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Earthquake Insurance in Japan
  • Earthquake Insurance on Dwelling Risks will pay claims for losses of buildings or contents caused by fire,destruction, burying or washing-away following earthquake, volcanic eruption, or tsunami following earthquake or volcanic eruption.
  • The insured amount of Earthquake Insurance on Dwelling Risks is set between 30% and 50% of the insured amount of fire insurance, and the upper limits are 50 million yen for dwelling houses and 10 million yen for household goods.
  • The national government is managing the system.
establishment of the earthquake insurance system
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Establishment of the earthquake insurance system

Jun. 1964 Niigata earthquake

The Minister of Finance asked the Insurance Council to develop specific policies for earthquake insurance

Apr. 1965 Report of the Insurance Council

Decide the outline of insurance, coverage, reinsurance method, underwriting method, etc.

Jun. 1966 Act for Earthquake Insurance

The system was carried out

the system initially introduced
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005The system initially introduced
  • Coverage of insurance
    • Buildings for residential use and Household goods
      • The objective of this system is considered to be to contribute to stabilization of the livelihood
  • Risk covered
    • Earthquakes, Volcanic eruptions, Tsunami
the system initially introduced55

\ 13118 billion

$ 11 billion

\ 75 billion

$ 0.6 billion

\ 5,000 billion

$ 41 billion

0

Liability of the government

50 %

Liability of private

Insurance companies

5 %

Loss of a single earthquake

Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

The system initially introduced
  • Insurance organization
    • Stop-loss reinsurance by the government
    • The present reinsurance scheme is below
the system as initially introduced
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005The system as initially introduced
  • Premium rate

1st class location

2nd

2nd or 3rd

Per year and \1,000 of insurance coverage

revisions in 2001
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Revisions in 2001
  • Situations
    • Many research on the earthquake were reported, and the ways of destruction of modern houses became clear
    • After the huge disaster, awareness of earthquake insurance became high, and a lot of opinions were given
revisions in 200158
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Revisions in 2001
  • Introduction of discount system
    • Discount for time of construction (10%)
      • Considering investigations of damage 1995 Great Hanshin-Awaji earthquake
    • Discount for earthquake resistance grade (10% - 30%)
      • The dwelling performance indication system developed by the government have put into operation
the present system
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005The present system
  • Premium rate
  • Discount system
    • Discount for time of construction (10%)
    • Discount for earthquake resistance grade (10-30%)

Per year and \1,000 of insurance coverage

the present system60
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005The present system
  • The limit of amount insured
    • \ 50 million for a building ($ 0.4 million)
    • \ 10 million for household goods ($ 83,000)
future of the earthquake insurance system
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Future of the earthquake Insurance system
  • Problems
    • Regional divisions of premium rate
    • The proportion insured (30 – 50%)
    • Low penetration rates of the earthquake insurance
      • The number of Earthquake policies per the number of Fire policies are 37.4% ( 2004)
    • Etc...
developments in ownership of earthquake insurance on dwelling risks policies
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Developments in Ownership ofEarthquake Insurance on Dwelling Risks Policies
other earthquake risk financing tools
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Other earthquake risk financing tools
  • Mutual Insurance
    • e.g., JA Mutual Insurance

Payout after the great Hanshin-Awaji earthquake (billion Yen)

  • ART
    • Cat-Bond (parametric bond)
    • Contingent Dept Facility
    • Etc.
cat bond for private firms

Trust company

(fund management)

*Special Purpose Company

Ordinary days

$100 million

interest (market rate)

bond issuing

financial transaction

Company

(Oriental Land )

Company

(Oriental Land )

SPC*

Investor

Investor

$100 million

commission

(3.1% / year)

commission

+ interest (market rate)

Earthquake

Trust company

principal payment

payment of the balance

after principal reduction

payment of capital

SPC*

$0~$100 million

Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Cat-Bond for private firms
parametric cat bond

US Dollar Loss

on Original Notional

Amount in Millions

80.00

80.00

68.00

56.00

65.00

44.00

50.00

32.00

35.00

20.00

20.00

Outer Grid

Inner Grid

7.1

7.3

7.5

7.7

JMA Magnitude

Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Parametric Cat-Bond
contingent debt facility

Ordinary days

**Sizuoka Bank,

Mitsui Sumitomo Insurance, etc.

fund management

with safe assets

$4 billion

asset management yield

Company

(Tomoegawa Paper)

Company

(Tomoegawa Paper)

SPC*

Lender**

SPC*

Lender**

syndicate loan

loan reservation contract

commission

interest

debt guarantee

Development Bank of Japan

Development Bank of Japan

guarantee commission

Earthquake

loan draw down

$0~$4 billion

interest

interest

debt guarantee

guarantee commission

Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Contingent Debt Facility
issues
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Issues
  • Households
    • Low dissemination of earthquake insurance in household
      • Limited coverage
    • Partial link between premium and seismic vulnerability
  • Firms
    • Few firms has earthquake insurance policies
  • General
    • Built up a bridge between insurance and mitigation
niigata chuetsu eq oct 23 2004
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Niigata Chuetsu EQ (Oct.23,2004)

Niigata Chuetsu

6.8 M (JMM, Largest )

10km depth?

Unknown fault?

Yamakoshi

Land

slide

Damage of Road

Due to successive

aftershocks and road network

Damages, recovery speed of

Infrastructures were slow

Ojiya

Kawaguchi Town

5Km

estimated economic losses of chu etsu eq pref gov of niigata
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Estimated Economic Losses of Chu-Etsu EQ(Pref. Gov. of Niigata)
slide70
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Niigata Sanyo Electronics co. suffers economic losses in their property in 50 billion yen. But, even such a big company did not have earthquake risk financing counter measures.

way forward to building up the bridge for firms
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Way forward to building up the bridge for firms
  • Business Continuity Plan will be required for large scale companies and recommended for middle and small scale companies.
  • Encourage good firms through market
    • Investors and Public relations
  • Mitigation and Risk Financing?
slide72
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005

Characteristics of Risk Governance

For Earthquake Risk

Different types of vehicles, i.e., information sharing, regulation, market mechanism which includes economic incentives, are used for harmonized risk governance.

(Viewpoint: Manageability by victims)

○Risk characteristics

Imperfect knowledge on EQ disaster-scale and occurrence. Mitigation cost considerably and ambiguous measurement of performance of building

○Governance corresponding to risk characteristics (hypothesis)

→Low incentives for mitigation by individual building owners and limitation on direct management by governments.

Risk Governance Under Ambiguity

discussion conclusions
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005Discussion & Conclusions
  • Risk Governance Related Issues:
  • Feasible and affordable countermeasures are necessary to cope with threats brought by complexity and interdependencies of critical infrastructure.
  • Legitimacy Question: Do we have proper arrangement of right to decide under ambiguity?
    • Ownership/responsibility and Coordination/Partnership
  • InformationIssues:incentive for reporting truth (Accountability?), measurement technologies
slide74
Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk:The Role of Public-Private Partnerships December 8–9, 2005
  • Thank you very much for your attention!