The massive earthquake in Japan could lead to insured losses of nearly $35 billion, risk modelling company AIR Worldwide said, making it one of the most expensive catastrophes in history.

That figure is nearly as much as the entire worldwide catastrophe loss to the global insurance industry in 2010, and could be the triggering event that forces higher prices in the insurance market after years of declines.   

AIR said its loss estimate range was $14.5 billion to $34.6 billion. That was based on a range of 1.2 trillion yen to 2.8 trillion yen, converted at 81.85 yen to the dollar.   

The firm cautioned the estimate was preliminary, and it has said its models do not factor in the effects of the tsunami that followed the earthquake, or any potential losses from nuclear damage.

AIR cautioned that in some cases, buildings will have been damaged by the 8.9-magnitude earthquake and then swept away by the flooding thereafter, making precise counting difficult. 

There are also lingering questions about the cost of the clean-up and long-term monitoring following explosions and radiation leaks at the Fukushima nuclear reactors. Such reactors generally have insurance that excludes earthquake damage, and many Japanese homeowners have nuclear exclusions in their own policies.   

That is likely to limit liability to the operator and the government and minimize impacts to the insurance industry itself.        

At the upper end of the range, this temblor will go down by far as the costliest earthquake in modern history in terms of insured losses, surpassing the roughly $15 billion in losses of the 1994 Northridge earthquake in California.

Of all catastrophes since 1970, adjusted for inflation, it would rank as the second costliest behind Hurricane Katrina. It may also be enough to stem years of price declines in the global property insurance and reinsurance markets, which are awash in excess capital following a lack of major hurricane disasters in recent times.   

Going into this year, analysts and brokers said it would take a $50 billion event to stem the price declines in the market for just a year. Since Jan. 1, the industry has also confronted at least $10 billion in losses from an earthquake in New Zealand, still-untold losses from Australian flooding and an estimated $8 billion to $10 billion in losses from unrest in the Middle East.

Cumulatively, some like Standard & Poor's believe the losses may be enough to trigger the long-awaited "hard market" in which insurers again have pricing power. - Reuters