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Natural Catastrophe Risk Management Policy in Japan

Natural Catastrophe Risk Management Policy in Japan Hirokazu Tatano Disaster Prevention Research Institute, Kyoto University Global Conference on Insurance and Reınsurance for Natural Catastrophe Rısk ： The Role of Public-Private Partnerships December 8–9, 2005 Natural Disaster in the World

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Natural Catastrophe Risk Management Policy in Japan

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  1. Natural Catastrophe Risk Management Policy in Japan HirokazuTatano Disaster Prevention Research Institute, Kyoto University Global Conference on Insurance and Reınsurance for Natural Catastrophe Rısk：The Role of Public-Private PartnershipsDecember 8–9, 2005

  2. Natural Disaster in the World Natural Disaster in Japan Weather Related Disaster Risk Management Risk Control Policies Risk Financing Policies Earthquake Disaster Risk Management Risk Control Policies Risk Financing Policies Discussion & Conclusion Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Contents

  3. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Great Natural Disasters in the World Source: Munich RE. 2005

  4. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Economic losses and insured losses with trend Source: Munich RE. 2005

  5. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Trend of Natural Disaster in the world • Larger catastrophic disaster is more likely to occur. • Number of Disaster for which some international aid is executed. • 60s：90s=1:3 • Economic losses glowed in high rate • 60s：90s= 1:9 • Insured losses increased in higher rate • Anti-catastrophe insurance available in high-income countries • 60s：90s =1：16

  6. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 What is happening? • Increase in exposure : Population and assets are concentrating to hazardous area • Vulnerability : Population and assets have not enough resistance against natural hazards

  7. Vulnerability: degree of resistance of the asset & population against disaster Population & Asset Exposure：population and asset exposed to the threat of natural hazards Hazard:Flood, Earthquakes,etc Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Natural Hazard →Disaster Consequencesof Human Behavior

  8. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Urban population is dominating in the world http://www.faculty.fairfield.edu/faculty/hodgson/Courses/so11/population/urbanization.htm

  9. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Higher vulnerability in less income countries Large natural disasters over period 1980- 2005 Source: Munich Re. 2005

  10. Proactive CounterMeasuresofDisasterRisk Management Benefit of Mitigation can be different. It depends on the possibility of risk transfer [ Kobayashi & Yokomastu 2000]. Needs for integration Combination of Risk control and financing measure is important! Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005

  11. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Smaller insurance coverage natural disaster losses in lower income countries Large natural disasters over period 1980- 1999 Source: Munich Re. 2003

  12. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Proactive risk financing is less used in developing countries Source: Warner 2005.

  13. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Current and ideal disaster risk management counter measures in developing countries Source: Warner 2005.

  14. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Observations and Issues • Disaster related losses are increasing in the world. • Less developed countries are more vulnerable and have less insurance coverage. • Proactive disaster risk management is ideal but difficult in practice in developing countries. • How can we overcome such problems? • Japanese experience

  15. Natural Disasters in Japan A Natural disaster-prone country

  16. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 JAPAN: A Disaster-Prone Country • Japan covers only 0.25% of the land area on the grove, the number of earthquakes and distribution of active volcanoes is quite high. • 20% of earthquakes with magnitude of 6.0 or larger were occurred in Japan. • 10% of active volcanoes is located in Japan. Number of active volcanoes Number of earthquakes with magnitude of 6.0 or larger

  17. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Epicenters of Earthquakes which were magnitude 4.0 or above from 1980 to 1996 International Seismological Centre

  18. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 The Number of Deaths and Missing in Natural Disasters in Japan Tonankai quake Hanshin-Awaji earthquake Fukui quake Typhoon Ise-wan Weather Related Disasters

  19. (billion Yen) Annual Damage Percentage in the GDP Amount of Damage of Facilities Percentage in the GDP Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Amount of Damage of Facilities due to Disasters

  20. Disaster Management Policies Earlier development

  21. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Disaster Relief Act (1947) Large Earthquakes struck Japan during 1940s. Government’s relief policy was established

  22. Year-Mon. Cause Death Missing Causality 1934.9 Muroto Typhoon 2702 334 14994 1945.9 Makurazaki Typhoon 2473 1283 2452 1947.9 Catharine Typhoon 1077 853 1547 1954.9 Toyamaru Typhoon 1361 400 1601 1959.9 Isewan Typhoon 4697 401 38921 Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Large scale flood disasters frequently happened from 1930s to 1950s. http://www.ffortune.net/social/seso/nihon-mei/muroto-taihu.htm

  23. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 High Tide Disaster by Isewan Typhoon in 1959 http://www12.freeweb.ne.jp/photo/ajapskwn/saigai/p02.html

  24. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Disaster Management Policy • Needs for change of the policy from reactive to proactive approach. • In 1961, the Disaster Countermeasure Basic Act was legislated.

  25. Disaster Countermeasure Basic Act (1961) • The immense damage caused by the Typhoon Ise-wan in 1959 was a turning point for disaster management, giving rise to a movement to plan and prepare a comprehensive disaster management system, and in 1961, the Disaster Countermeasures Basic Act was enacted. • Thereafter, the disaster management system has been improved and strengthened following the occurrence of large natural disasters and accidents.

  26. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Change in Disaster Management Related Budget

  27. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Changes in Disaster Management Budget by Category Classification

  28. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Regional Disaster Prevention Plan • Triggered by Isewan disaster and enforced. • Every level of public sectors shall have a plan by disaster prevention basic act (legal duty). • A plan shall include long-term establishment plan on (1) forecasting system, (2) facilities for flood fighting, (3) warning criteria, (4) rescue system, and (5) communications in emergency.

  29. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 The Great Hanshin-Awaji Earthquake, 1995 Effective Disaster Response is required. Rapid Response, Information systems, Crisis Management, etc

  30. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Disaster Management Systems • Organizational Change in the National Government • At the time of the reorganization of the Central Government in 2001, the Cabinet Office undertook the administrative duties for disaster management. The Director-General for Disaster Management is mandated to undertake basic policy making and planning, coordinate the activities of all ministries and agencies and respond to large-scale disasters. In addition, the position“Minister of State for Disaster Management” was newly established as the Minister State for Special Missions. • Disaster Information Systems • Disaster Management Related Communication Network Etc.

  31. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Disaster ManagementRadio Communications System

  32. Flood Risk Management Policies

  33. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Features of Flood Risk Management in Japan • Intensive investment for structural counter measures of flood control • Comprehensive flood protection plan including structural and nonstructural flood protection • Widely disseminated comprehensive property insurance which is run by private insurance company • Weak public involvement and conflicts which highlights tradeoffs between environment and flood protection • Weak link to land-use policies Complementarily between flood risk control and financing measures.

  34. Flood Control (Structural) Measures Storage enlargement and diversion reservoir levee diversion dredge Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005

  35. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Rapid Industrialization and Urbanization in 1960s and 1970s

  36. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Industrialization and Urbanization • Needs for Water Use • The River Act revised to aim not only at flood control but also at water utilization. • Needs for Flood Control

  37. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Large-scale Construction of Multi-purpose Dams • In Japan as of 2000 • 2,500 dams • 20 billion m3 capacity Water supply purpose Flood control purpose http://www.ktr.mlit.go.jp/tonedamu/index.htm

  38. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Results of Intensive Structural Flood Control Accelerated increase in economic loss / area Decrease in inundated area

  39. 1882 37years past 1919 35years past 1954 42years past 1996 1930 1911 Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Land use planning(?)and Flood Protection in Tokyo Construction of Edo-Gawa discharge channel

  40. Non-structuralflood control counter measures Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Conservation of upper-stream basin Radar Flood fighting Land use control/management* Flood Hazard Mapping H Flood insurance Forecasting and early warning Retention ponds and infiltration * Not working well in Japan Flood-proofing

  41. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Tsurumi River Basin (235 km2) Red＝ urban area Dark green=forest Light green=farm land 1948 Ratio of urban area =10 % Pop.=0.49 mil. 1995 Ratio of urban area =83 % Pop.=1.7 mil. http://www.keihin.ktr.mlit.go.jp/TURUMI/masterplan/j1/j01gaiyo_gaiyo2_2.htm

  42. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Comprehensive Flood Protection Plan：Immediate Target for Structural Countermeasure Development for Flood ProtectionIntroduction of Non-Structural Countermeasures • River channel capacity expansion up to 50mm/hr • Increase of Retention Capacity • Development of retention ponds/pools to mitigate the increased run-off is asked for when a urban development project is executed. • Public provision of flood hazard maps

  43. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Flood Risk Financing • Fire Insurance covers wind, hail and snow triggered disasters like storms and avalanches. • Comprehensive property insurance covers not only wind, hail and snow triggered disasters but also water related disaster like floods. • These insurances provided by private insurance companies.

  44. 100 80 60 Payout(%) 40 20 0 0 20 40 60 80 100 Loss ratio(%) Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Comprehensive property insurance ● Storm ● Flood 100 75 50 Payout(%) 25 0 0 25 50 75 100 Loss Ratio(%)

  45. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Total and insured losses of major weather-related disasters in the past Source: EM-DAT 2005

  46. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 The Nagara River Estuary Barrage Conflict The Nagara River flows out of the mountains of Gifu Prefecture in central Japan. For roughly a half of its 136-kilometer course, it runs south through narrow valleys. Then, flowing through high dykes, it makes its way across the Nobi Plain before emptying into Ise Bay, and into the Pacific Ocean. • Location Nagara River Estuary Barrage

  47. Landslides：Hiroshima（1999.６） Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Death:27 Upper : http://www.chugoku-np.co.jp/News/990629_gouu/photo/2.html Left: http://wwwsoc.nacsis.ac.jp/jsce2/report/02/01/sokuho.htm

  48. Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 Improving Flood Risk Management • Weak public involvement and conflicts which highlights tradeoffs between environment and flood protection • New River Act (1997): Improving environment becomes one of the objects of river management. Public involvement becomes requirement for implementation plan. • Weak link to land-use policies • Partial improvement for landslide hazard: It becomes mandatory to explain landslide risk for sellers to buyers when real estate is in the dangerous zone against landslide hazard.

  49. River Council Master plan Academic experts Local residents Authorization of the basic plan for the implementation of construction works Global Conference on Insurance and Reınsurancefor Natural Catastrophe Risk：The Role of Public-Private Partnerships December 8–9, 2005 New river act was legislated in 1997. Old planning procedure New planning procedure Master Plan Basic plan for the implementation of construction works Details: Fundamental policy, design flood, design flood flow and others Details Fundamental policy, design flood, design flood flows and other details of the river works Drafting of a fundamental river management policy Procedure Opinion Authorization of master plan Procedure Development of a basic plan for the implementation of construction works Implementation plan Details: Details of river works and river maintenance Procedure Opinion River Council Opinions Opinions Drafting of implementation plan Opinions Heads of local public bodies Authorization of implementation plan Execution Execution

  50. Earthquake Risk Management Policies Focusing on earthquake risk financing

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