Key Challenges for the Region
High Seismic Exposure: Japan sits on multiple tectonic plate boundaries, making it one of the most earthquake-prone countries in the world.
Delayed Recovery under Traditional Insurance: Conventional indemnity policies often require lengthy on-site assessments, slowing down access to much-needed recovery funds.
Wider Social & Economic Impact: Earthquakes disrupt communities, damage infrastructure, and interrupt business operations, placing long-term strain on both local economies and public services.
Transparent Terms
Policies are built on measurable triggers—like rainfall or temperature—so clients and their brokers know exactly when payouts occur. No fine print, no ambiguity.
Customized Coverage
We work closely with brokers to build each policy around the client’s specific risk and budget profile, providing protection where traditional insurance often cannot.
Fast, Predictable Payouts
Once a triggering event occurs, payment is issued quickly and automatically—no need for on-site assessments or lengthy claims processes.
Flexible Use of Funds
Payouts are based on the severity of natural events occurring, not solely on proven losses, giving clients immediate access to funds and empowering them to cover any type of financial loss, not just for physical damage.
Earthquakes present severe challenges for communities across Japan. In addition to the direct destruction of buildings and infrastructure, seismic events lead to prolonged disruptions in daily life and impose significant economic and social costs.
Descartes’ Parametric Earthquake Insurance: A Fast and Transparent Solution
Descartes’ solution leverages the Shindo Seismic Intensity Scale, an official and widely recognized measure in Japan. By tying payouts to pre-defined intensity thresholds, this approach ensures rapid and automatic compensation. Clients gain immediate access to funds—supporting not only the repair of physical damage, but also the broader recovery of businesses, services, and communities.
case study example
Parametric Flood Solution for Japan
In 2016, two consecutive earthquakes struck Kumamoto, Japan, with a peak intensity of 7 on the Shindo scale.
Problem
The earthquakes caused widespread destruction and financial losses, especially in areas experiencing high seismic activity. An insured location experienced an earthquake with a recorded intensity of 6.4 on the Shindo scale. Despite the devastation, traditional indemnity-based insurance might face delays in assessment and payout, hindering the client’s ability to recover quickly.
Solution
If the client had a parametric earthquake insurance cover from Descartes, with an insured limit of ¥3 billion, the payout would have been triggered automatically. For a 6.4 intensity earthquake, the client would receive ¥1.8 billion, which is 60% of the insured ¥3 billion sum.
Result
This immediate payout ensures rapid access to funds for recovery, avoiding delays often associated with traditional insurance assessments.
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