The deadly earthquakes in Niigata Prefecture caused catastrophic landslides and destroyed buildings, but they will not cause much damage to nonlife insurance firms because their high reserves and the state's financial safety net will protect them, according to insurance specialists.
Under the earthquake insurance system, established in 1966, the greater the damage, the more the government pays.
If damages caused by this month's earthquakes are assessed at 75 billion yen or lower, insurance companies will have to bear the full cost of payments. If damages reach between 75 billion yen and 1 trillion yen, the government will split the cost with insurers, while damages beyond this amount will be covered by the government to the tune of 95 percent.
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