Asia Europe Journal

, Volume 11, Issue 1, pp 79–91 | Cite as

Confronting earthquake risk in Japan—are private households underinsured?

Original Paper
First Online:
  • 166 Downloads

Abstract

Despite the fact that Japan is an earthquake-prone country and Japanese people are known to be highly risk averse, less than half of Japanese households are insured against earthquake risk. Based on a survey among experts in the field, the article gives an overview of earthquake insurance schemes and evaluates possible reasons for the relatively low level of insurance and ways for improvement. Experts agree that more insurance is desirable, but they share a less clear opinion about the causes and possible remedies. More research is warranted.

Keywords

Residential Building Insurance Contract Tohoku Earthquake Earthquake Risk Household Good 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
This is a preview of subscription content, log in to check access.

References

  1. Bank of Japan (2011) Flow of funds. An overview of Japan, US, and the Euro area. Bank of Japan, Research and Statistics Department. http://www.boj.or.jp/en/statistics/sj/sjhiq.pdf. Accessed 5 March 2012
  2. Botzen WJW, van den Bergh JCJM (2008) Insurance against climate change and flooding in the Netherlands: present, future, and comparison with other countries. Risk Analysis 28:413–426CrossRefGoogle Scholar
  3. Browne MJ, Knoller C, Richter A (2012) Risk perception, insurance agents, and the demand for flood insurance. Munich Risk and Insurance Center working paper no. 10, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1982483. Accessed 5 March 2012
  4. Cai J, de Janvry A, Sadoulet E (2011) Social networks and insurance take-up. Evidence from a randomized experiment in China. ILO, Research Paper no. 8, (http://www.ilo.org/public/english/employment/mifacility/download/repaper8.pdf)
  5. Coop Kobe (1997) Hinanjô seikatsu kara no fukkô to atarashii komyuniti keisei e mukete [Towards the recovery from life in evacuation camps and new community formation], Coop Kobe Seikyô Kenkyû Kikô (unpublished report)Google Scholar
  6. Dillon RL, Tinsley CH, Cronin M (2010) Why near-miss events can decrease an individual's protective response to hurricanes. Risk Anal 31:440–449CrossRefGoogle Scholar
  7. Festinger L (1957) A theory of cognitive dissonance. Stanford University Press, StanfordGoogle Scholar
  8. Jaffee DM, Russell T (1997) Catastrophe insurance, capital markets, and uninsurable risks. J Risk Insur 64:205–230CrossRefGoogle Scholar
  9. Jones RS (2007) Income inequality, poverty and social spending in Japan. OECD Economics Department Working Papers No. 556. Paris: OECDGoogle Scholar
  10. Kojin Saimusha no Shitekiseiri ni kansuru Gaidorain Kenkyûkai (2011) Kojin Saimusha no Shitekiseiri ni kansuru Gaidorain [Guideline concerning private liquidation of private debtors]. 23 July 2011, http://www.fsa.go.jp/news/23/20110819-1/01.pdf
  11. Kunreuther H (1984) Causes of underinsurance against natural disaster. Genenva Pap Risk Insur 9:206–220Google Scholar
  12. Kunreuther H, Pauly M (2004) Neglecting disaster. Why don't people insure against large losses? J Risk Uncertain 28:5–21CrossRefGoogle Scholar
  13. Kurasawa S (2012) Higashi nihon daishinsai ni yori shôjita nijûrôn mondai to shihonsei kashiirekin no sekkyokuteki katsuyô ni tsuite [The double loan problem caused by the Great East Japan Disaster and pro-active utilization of equity-like loans]. FAS Group Newsletter, 33, KPMG, http://fas-group.kpmg.or.jp/knowledge/fas-group-newsletter/2012/201202_cr.html. Accessed 5 March 2012
  14. Linnerooth-Bayer J, Mechler R, Hochrainer-Stigler S (2011) Insurance against losses from natural disasters in developing countries. J Integr Disaster Risk Manag 1:1–23Google Scholar
  15. NLIRO (2008) Earthquake insurance in Japan. Non-Life Insurance Rating Organization of Japan, April 2008, http://www.nliro.or.jp/english/earthquake.html. Accessed 5 March 2012
  16. Sawada Y, Shimizutani S (2008) How do people cope with natural disasters? Evidence from the Great Hanshin-Awaji (Kobe) Earthquake in 1995. J Money, Credit, Bank 40:463–488CrossRefGoogle Scholar
  17. Smolka A (2006) Natural disasters and the challenge of extreme events: risk management from an insurance perspective. Philos Trans R Soc 364:2147–2165CrossRefGoogle Scholar
  18. Suisse Re (2012) Lessons from recent major earthquakes. Suisse Reinsurance Company, http://www.swissre.com/clients/Lessons_from_recent_major_earthquakes.html. Accessed 5 March 2012
  19. Waldenberger F, Eilker J (2011) The Japanese economy after the Tokoku earthquake. ISPI Analysis 82:1–7, December 2011Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.Munich School of ManagementLudwig-Maximilians-University MunichMunichGermany

Personalised recommendations