The disaster in Japan offers a new “calibration point” for insurers and the world, Glenn Renwick, CEO of insurance company Progressive,told CNBC Wednesday.
“There’s no blueprint for this sort of thing,” said Renwick of Japan, where, reportedly, most people, as many as 70 percent by some accounts, lack earthquake insurance.
Nonetheless, insurers covering all types of losses in Japan will be shelling out big bucks, nearly $35 billion, according to a Reuters report on Sunday, making it one of the most expensive catastrophes in history, even without additional tsunami losses factored in.
That figure is nearly as much as the entire worldwide catastrophe loss for the global insurance industry in 2010 and could be an event that forces steeper prices in the insurance market after years of declines, reported the wire service.
Progressive , which issued net premiums of $1.129 million in its February earningsreport on Wednesday, doesn’t insure in Japan. The company has dealt with claims involving major natural disasters, including earthquakes in California and hurricanes Katrina and Andrew.
“You have to step up as an insurer,” said Renwick of handling claims. “This is what people paid for. This is what brands and reputations are based on.”
Renwick said that insurers need to balance the safety of employees with the speed of response and must be creative.
Post-Katrina, Renwick decided, based on the poor water quality in New Orleans, that every affected car Progressive insured would be crushed to prevent it or its parts from being used on the road again.