The government's Japan Earthquake Reinsurance Pool, will pay a portion of this estimate, about $2 billion to $4 billion, which will reduce the total cost to private insurers, said EQECAT .
The estimate also includes an estimated payout of $2 billion to $3 billion by life insurers.
While the exact cost of the disaster won't be known for months, estimates from catastrophe-risk modeling companies like EQECAT give an early glimpse at the ultimate costs. A competing firm, AIR Worldwide, estimated Sunday the quake caused insured property losses of $15 billion to $35 billion. Its estimate didn't include the effects of the tsunami.
While EQECAT estimate is lower, the disaster could still become the largest ever earthquake loss for the insurance industry. The only quakes that rival it are the $15.3 billion earthquake in Northridge, Calif., in 1995, and last month's temblor in Christchurch, New Zealand, where insured costs are still being tallied but could exceed $10 billion.
Industry analysts have been attempting to determine if losses from the disaster would force the price of catastrophe insurance higher around the globe. Insurers and reinsurers are already on the hook for substantial claims tied to storms and flooding in Australia and the Christchurch quake, and analysts said many reinsurance companies will report first-quarter losses and may end up losing money for all of 2011.
The world's largest reinsurers, Swiss Reinsurance Co. and Munich Re, said before last week's catastrophe they had already largely exhausted their annual provision for natural disasters.
If the EQECAT estimate proves true, prices may stop their years-long decline, but some analysts and executives have said losses would have to be substantially larger to cause prices to rise.