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Japan disaster more expensive than Katrina

By Chris Isidore, senior writer


NEW YORK (CNNMoney) -- The earthquake and tsunami that slammed Japan on Friday will likely wind up topping Hurricane Katrina as the most expensive disaster in history, according to a leading firm that estimates such losses.

Jayanta Guin, senior vice president of research and modeling for AIR Worldwide, said that it still too early to come up with even a preliminary estimate for the total losses, but that it is clear that it will "be far greater than we experienced in Katrina."

That 2005 hurricane, which devastated New Orleans and the U.S. Gulf Coast, had estimated losses of $125 billion, according to the Insurance Information Institute.

Nearly 3,400 were confirmed dead as of Tuesday morning in Japan, with nearly 7,000 more still missing and nearly a half-million in shelters due to both damage to their homes and the risks of meltdowns at nuclear reactors damaged by the disaster.

Still, Japan's wealth and preparations for earthquakes and tsunamis probably spared many lives.

Last year's earthquake in Haiti killed 222,570 according to the Insurance Information Institute, while the 2004 tsunami that spread across the Indian Ocean killed nearly that many partly due to the lack of a warning system that is present in Japan.

But the economic losses in Japan will be huge, with likely only a fraction of the losses covered by insurance. AIR Worldwide, which provides catastrophe estimates to the global insurance industry, says only about 14% to 17% of residences in Japan have earthquake insurance.

Guin said his firm's projections do not take into account any estimated losses from the problems at the nuclear plants either because it is too soon to say how many neighbors of the plants who have been evacuated will be able to return to their homes and businesses.

"The wildcard in this will be the nuclear problems," he said.

Guin said his firm probably won't be able to put a firm dollar amount on economic and insured losses until the end of the week.

Another catastrophe modeling firm, Eqecat, has said only that the total losses will be more than $100 billion. Investment bank Credit Suisse estimates losses in the $175 billion to $185 billion range. To top of page

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