The unprecedented nature of Friday's earthquake in Japan, plus the damage from the subsequent tsunami and fires, makes estimating insured losses especially challenging, senior executives at two top catastrophe modeling firms said on Saturday.

There are about $24 billion in insured properties in the three-kilometer (1.8 mile) band closest to the coast in the four most affected prefectures, Jayanta Guin of Air Worldwide, a disaster-modeling firm, said in an interview. In the four prefectures most affected by the quake's shaking, there is some $300 billion in insured property.

But that does not equate in any way to a similar loss value. Guin said it will be days or even weeks until an accurate estimate can be made of what was lost, how it was lost, and what it will take to fix.

One problem, Guin said, is that the quake's damage was hard to model because its intensity and location were unexpected.

Eqecat, another risk modeler, said the earthquake was at least eight times stronger than any it had modeled in that particular part of Japan for the next 30 years.

Air Worldwide, Eqecat and RMS are the three major risk-modeling firms that help insurance companies predict where and how they will suffer losses and how severe they will be.

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We are in unprecedented territory when it comes to understanding the estimate of this earthquake, said Guin, Air Worldwide's senior vice president of research and modeling. Even the best scientific consensus, including scientists from Japan, had not contemplated such a large scenario in that part of the Japan trench.

Financial analysts said on Friday the quake may have caused up to $15 billion in insured losses, which could make it the costliest earthquake in insurance industry history.

NUCLEAR EFFECTS

Friday's 8.9-magnitude earthquake generated a tsunami wave 33 feet high and estimates put the death toll at 1,700 or more. Officials scrambled on Saturday to contain the damage from a nuclear plant explosion that initially evoked fears of a Chernobyl-like disaster.

Early indications suggested Japan was not a party to international conventions limiting nuclear liability. AIG, the largest foreign property insurer in Japan, is believed to have a blanket nuclear exclusion in all its Japanese policies.

That raises questions about how much coverage homeowners affected in some way by the accident at the Fukushima Daiichi reactor will end up having. The answer likely will depend on what sort of coverage operator Tokyo Electric has in place.

The scrambling of the reactor is a huge event that's really difficult to model, Eqecat senior vice president Tom Larsen said in an interview. He said any impact was more likely to be felt by life insurers rather than property insurers.

Another major question for the global insurance industry in the days ahead will be pricing and whether the disaster will be enough to force insurers and reinsurers to raise prices after three years of declines.

Going into this year, brokers and analysts said it would take an insured event of $40 billion to $50 billion in size to stem price declines for at least one year.

Standard & Poor's equity analysts estimated on Friday that insurers will end up facing at least $30 billion in claims this quarter from a combination of the Japan quake, a quake in New Zealand, floods in Australia and losses related to unrest in the Middle East.

S&P said that would probably be enough to turn the market. In a so-called hard market insurers have the capacity to raise prices for coverage across the board.

Major insurers and reinsurers with exposure to the Japanese market, such as American International Group Inc, ACE Ltd, Munich Re and Swiss Re, are expected to take weeks to assess their own losses. Even then, the numbers can steadily rise for months afterward, as they did with the September 2010 New Zealand quake.

One thing that is likely to contain their losses is the relatively small insurance penetration in the Japanese market. Some estimates suggest as few as 14 percent of property owners in the country have earthquake insurance.

The tough part is, what's that going to do to their economy? If they have that much damage that's uninsured, you may have to tough it out, Eqecat's Larsen said.

(Reporting by Ben Berkowitz; Editing by Bill Trott)

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