Customer Case Study: Parametric QUAKE Japan
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Our customer is a manufacturing company listed on the Tokyo Stock Exchange, and whose parametric earthquake policy with us started in 2017.
Geographically, Japan is surrounded by oceanic plates; the Pacific plate and Philippine plate to the east, and the North America plate and the Eurasian plate to the west. Hence, Japan experiences high frequency of earthquakes in a year that range in intensity.
On 13 Feb 2021, at approximately 23:07hrs local time, an earthquake with a magnitude of 7.3, and Shindo 6- was reported at the Koriyama Asahi station in Fukushima, Japan.
Buildings shook and many buildings were significantly damaged. 950,000 homes were initially without power due to the emergency shutdown of several power plants in the region. Several fires had also broken out in residential areas of Sendai City, Koriyama City, and Shiogama City. Heavy rain that followed the earthquake resulted in landslides and avalanches.
The customer's primary objective was to supplement their traditional earthquake insurance and cover deductible expenses through the solution’s quick payment and flexibility in how funds can be used. The structure provided a dynamic payout that increased with the intensity of shaking based on the Japan Meteorological Agency's (JMA) seismic scale – Shindo. The Shindo is a scale (from 0 to 7) that measures local ground shaking intensity, as opposed to the amount of energy released in an earthquake (magnitude). In this case, the payout was based on Shindo level 6- and upwards.
The earthquake caused physical damage at the customer's premises and interrupted its business operations for a period of time. Due to the earthquake’s intensity, the customer qualified for a partial payout. They received the payment three days following confirmation of the Shindo level by JMA, and 44 days after the event. This helped the customer cover the immediate expenses associated with the losses.
"The parametric insurance offered by Swiss Re Corporate Solutions gave us a different perspective to earthquake insurance coverage, given the flexibility it offers. The ease and speed of the payout which was delivered just 3 days after the Shindo level by JMA was confirmed enabled us to resume our business operations quickly. Parametric insurance really delivered on its value."
"Parametric insurance was an innovative solution that our client found attractive as it gave them the ability to supplement their traditional earthquake insurance. From the way the insurance was structured and the speed at which the payout was made, parametric insurance offered the client the agility they needed when the earthquake struck. As a broker, it showed us the benefits of parametric insurance."
Learn more about our parametric QUAKE solution.