Munich Re Specialty has launched a parametric earthquake insurance product for corporate clients in Japan, that supports recovery and business continuity even when no physical damage occurs.
The product launched through the Lloyd’s Japan platform will provide businesses with access to liquidity after an earthquake, subject to policy terms, conditions, and limits.
The product launch comes as southern Japan experiences renewed seismic activity, with a magnitude 7.1 earthquake striking Kyushu Island in Kumamoto Prefecture on 28 July, causing extensive damage to property and infrastructure.
Japan experiences about 1,500 noticeable earthquakes each year because of its location near tectonic faults. Munich Re said that larger earthquakes frequently disrupt business operations and supply chains, even when insured physical damage claims remain limited.
Trigger-based coverage
Munich Re Specialty said that the solution is intended for a broad range of industries, including businesses facing operational delays, supply chain disruptions, and post-event cash-flow pressures following seismic events. The product uses data from the Kik-net and K-NET seismic monitoring stations to determine when coverage is triggered and is supported by Munich Re Capital Partners, which specialises in alternative risk transfer and parametric natural catastrophe solutions.
Product to address operational disruption
The product coverage is intended to help companies manage financial pressures that can arise after an earthquake, including supply chain interruptions and operational delays.
Munich Re Global Head of Parametric Natural Catastrophe René Mück said that Japan has a strong demand for effective risk management solutions and so Munich Re Specialty has combined local market knowledge with global expertise in parametric natural catastrophe coverage to help Japanese businesses quantify complex exposures and address protection gaps. The solution provides coverage that emphasises clarity and speed while helping clients respond to earthquake-related business disruptions.