HDI Global SE, a corporate and specialty insurer headquartered in Germany and part of the Talanx AG group, has secured approval from the Japanese Financial Services Agency to launch a new parametric earthquake insurance product in Japan.
The insurer developed this offering in partnership with Descartes Underwriting SA, a Paris-based provider specialising in parametric insurance for natural catastrophe risks.
The collaboration used HDI Global’s Risk Finance division, HDI Enablers, to tailor the solution for the Japanese market.
The parametric earthquake insurance is designed to address the needs of Japanese businesses that face a range of losses due to seismic events.
The policy provides coverage for property damage as well as business interruption – both direct and indirect, and for both tangible and intangible losses.
Unlike traditional earthquake insurance, this product does not require policyholders to pay a deductible or franchise amount.
Claims are triggered when seismic activity reaches a predetermined threshold on the Shindo scale, as reported by the Japan Meteorological Agency.
Once the threshold is met, the policy pays a fixed amount, and the claims process is streamlined to allow for prompt settlement based on a straightforward declaration. This approach is intended to make it easier for businesses to recover from both physical and non-physical losses, with policy terms and triggers clearly defined in the documentation.
The new coverage will be made available through a network of insurance brokers and agencies throughout Japan.
Descartes Underwriting’s Japan Director, Ikuya Shimada, will oversee local representation for the initiative.
The launch coincides with ongoing changes in the Japanese insurance sector, where regulatory authorities are encouraging increased competition and the adoption of innovative insurance solutions.
Dr. Dirk Höring, who serves on the executive board of HDI Global SE, commented that the Japanese insurance market is experiencing structural shifts, with regulators supporting new product introductions to improve customer protection.
“The Japanese insurance market landscape is in the middle of a structural change. Regulatory bodies are fostering heightened competition amongst major local insurers and encouraging the introduction of new insurance solutions to further improve customer protection. Acting as the preferred partner in transformation for our clients, the timing is ideal to deliver this innovative parametric earthquake solution and address longstanding coverage gaps in the Japanese market,” he said.
Casey Sandler, interim managing director of HDI Global’s Tokyo branch, noted that earthquake risk remains a persistent concern for Japanese businesses, and that the new product is intended to help reduce the coverage gap for clients.
“It is a privilege to be able to provide this much overdue protection to our clients in Japan. The ever-present earthquake risk in Japan remains a challenge for businesses. Now, the aspect of a coverage gap is drastically reduced by our innovative parametric solution,” he said.
Violaine Raybaud, chief operating officer at Descartes Underwriting, said the partnership with HDI Global, along with Generali Global Corporate & Commercial as a key reinsurer, is intended to strengthen earthquake risk protection for the Japanese insurance market.
“Descartes is honoured to further contribute to the resilience of the Japanese economy, given the suitability of our core parametric approach to earthquake risk,” she said. “Together, we have delivered a step-change in earthquake protection to the benefits of Japanese insurance ecosystem.”
The introduction of this parametric product comes as the global gap in natural catastrophe insurance protection continues to expand.
Paolo Mantero, group chief strategy officer at Zurich, reported at a recent industry event in London that the gap has reached US$180 billion, representing a 65% increase over the past five years.
Mantero attributed this trend to more frequent and severe natural disasters, which he linked to climate change.
