Earthquake insurance for homes to rise substantially in Japan

Tokyo, May 26 : Premiums on earthquake insurance policies for homes in Japan will increase a further 20 percent to 30 percent from 2016, as studies reveal the potential for millions of homes to be damaged should powerful earthquakes occur in certain parts of the country, reported the Japanese daily Nikkei on Tuesday.

The General Insurance Rating Organisation of Japan will submit a new premium schedule to the Financial Services Agency in June, the newspaper said, following on from a rise of 15.5 percent in July 2014.

The new schedule to take effect in the second half of 2016 would push annual premiums for an $82,160 policy on a non-wood home in Tokyo up from $165 to between $198-$215.

More than 16 million homes were insured for earthquakes at the end of February, 75 percent more than a decade earlier.

This jump could be attributed to greater fear or awareness amongst homeowners following the devastating effects of the 9-magnitude earthquake and subsequent tsunami that struck north-eastern Japan on March 11, 2011.

Insurance companies paid over $9.8 billion in claims following those events.

The government estimates that a powerful quake in the 900-km Nankai Trough, south of Japan's Honshu Island, would cause damages costing $1.8 billion.

Experts believe a powerful earthquake in the trough could have disastrous consequences for two of the country's biggest cities, Tokyo and Yokohama, and other coastal and inland cities.