Study: Japan's insurance industry should be OK

A family looks at an area devastated by the March 11 earthquake and tsunami in Kesennuma, Miyagi Prefecture, northeastern Japan, Monday, April 4. (AP Photo/Yomiuri Shimbun, Haruka Takahashi)

Despite the thousands of deaths and huge global financial impact resulting from the March 11 magnitude 9.0 Japanese earthquake - the fifth largest ever recorded worldwide – and subsequent tsunami, the disaster will not have a devastating effect on either the capital of the Japanese insurance industry or the international reinsurance market, according to global professional services company Towers Watson.

However, the cumulative impact of worldwide catastrophe losses in 2010 and 2011, combined with Risk Management Solutions’ (RMS) recent version 11.0 model revisions, will likely result in some firming of catastrophe rates that will vary on a regional basis, although not at the same levels seen after Hurricane Katrina in 2005, according to the company.