While there would be implications / impact with a disaster of this magnitude on various sectors, Bharti Axa General Insurance feels that the catastrophe will have an effect on the re-insurance market but only next year from a rates perspective as most of the treaties globally have been signed for the year 2011.
“Overall given there were no major catastrophes last year the world re-insurance market was overall soft this year, so this earthquake + tsunami will not have a major impact,” said Dr. Amarnath Ananthanarayanan, CEO & MD, Bharti AXA General Insurance.
In terms of the Indian reinsurance market, given that there have been fortunately no major catastrophes the reinsurers will want to take a greater share of the Indian pie and therefore the rates will be very reasonable despite this earthquake/tsunami.
Reinsurance stocks across Europe dropped sharply on Friday after the massive earthquake off the coast of Japan triggered a devastating tsunami. Shares in Swiss Re dropped 5 per cent while others like Munich Re AG , Hannover Re AG and Scor SE fell between 5-8 per cent.
The Tohoku region has been hit by a major earthquake and tidal wave. Damage seems likely to be less than the Kobe quake on 17 January 1995. According to economists, despite the scale of the Tohoku disaster, it is hard to find much evidence in the macroeconomic data of the effects of the Kobe earthquake.
“Bond yields did not move much in the immediate aftermath of the Kobe quake (although public finances were not in bad shape at the time), but yields fell in subsequent months as the stronger yen helped to reduce growth
expectations and the economy headed into deflation. Inevitably there will be microeconomic disruptions, as there were after Kobe
and even Chuetsu. However, many firms reportedly diversified supply chains in the wake of Kobe, so the impact should be lower,” said Richard Jerram, Chief Economist in Asia, Macquarie.