Posts Tagged ‘Japan earthquake’

Let them rent mansions: Compensation for disaster victims will barely make a difference

Friday, April 29th, 2011

Cleaning up after the March 11 tsunami in Sendai (Satoko Kawasaki photo/The Japan Times)

For seven weeks now people from all over the world have been donating money to various charities to help the victims of the March 11 earthquake and tsunami. According to NHK’s morning consumer affairs show, “Asaichi,” as of April 25 ¥1.7 billion had been collected by Japan Red Cross and other charity organizations. After going through four stages of bureaucratic processing the money was supposed to start reaching victims on April 27. In the first wave of payments, affected households would receive ¥350,000 for each family member who died or is declared missing. If the family completely lost its home in the disaster, it would receive an additional ¥350,000. If the home was partially destroyed, the amount would be ¥180,000. Families who have been evacuated from the area surrounding the Fukushima No. 1 nuclear reactor receive ¥350,000.

That cash will certainly help, but as explained in an earlier post the burden of rebuilding shattered lives mainly falls on the central government, which will only compensate homeowners and businesses by so much. And as explained in another post, earthquake insurance, like supplemental medical insurance, is not designed to cover entire losses. Basically, benefits provide a little extra money, something to live off of while a homeowner or business owner decides whether or not he wants to go through the grueling process of starting over from scratch, which means borrowing money. NHK interviewed a Sendai family whose 4-year-old home was spared from the tsunami but nevertheless condemned by the local government because the landfill under it had subsided to the point where the foundation was at risk. They still owe more than ¥20 million on their 30-year mortgage and though they have earthquake insurance the benefits will cover, at most, only half the balance; which means they have to come up with the other half of the loan themselves. Then, presumably, they have to take out a new loan if they want to buy a new house. According to one financial planner on the show, they’d be better off renting, “but, of course there are financial disadvantages to renting,” she added. Obviously, in this case, there are even bigger disadvantages in owning.

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Consumers suddenly rushing back to pariah produce

Thursday, April 14th, 2011

On Tuesday, Chief Cabinet Secretary Yukio Edano took part in a bazaar in front of the JR Shimbashi Station in Tokyo that featured produce from Iwaki in Fukushima Prefecture. Iwaki is just outside the evacuation perimeter set by the government, and Edano assured shoppers at the bazaar that the food from Iwaki and other Fukushima farms “that are sold in markets are perfectly safe.” To prove it he ate some strawberries and tomatoes.

Edano’s reassurances recalled a similar stunt carried out by the current prime minister, Naoto Kan, in 1996 when he was the health minister during a food-poisoning outbreak that was blamed on daikon radish sprouts. In order to reassure consumers that the sprouts were in fact safe, Kan ate a bowl of them on TV. The implication is that rumors about food safety often outrun the facts, and the government has little recourse except to offer visual proof that the fear of tainted food is unsubstantiated. Usually, however, it’s the government that exacerbated the rumors in the first place.

Continue reading about self-restraint →

Disaster area quickly becomes huge automobile market

Friday, April 8th, 2011

One of the most indelible images people will take away from all those horrifying videos of the tsunami of March 11 is automobiles being swept up by the dozens and carried away. What’s important to remember about the Tohoku region, especially the coastal part, is that cars are an indispensable component of everyday life there. In Tohoku, there is one car for every two humans. Because much of the area is cut off from the rest of Honshu by mountains, there aren’t that many train lines. In fact, many of the people who died were in their cars at the time, trying to escape inland after the tsunami alert was broadcast. There are many stories of people driving to the homes of elderly relatives to pick them up and then getting caught in the wall of water.

In Miyagi Prefecture alone, according to a report on TBS, 146,000 vehicles were destroyed. The central government has pledged to do the cleaning up, but cars pose a special problem. Much of the debris is beyond being recognizable, but cars, even ones that no longer function, tend to be intact and thus are considered private property by local governments. They cannot simply be carted away as garbage. The process so far has been for tow trucks to bring the damaged vehicles to large lots where the owners can claim them and then sign a release allowing them to be scrapped.

However, in many cases the owners don’t even know where their cars are, so it is taking a long time to process all the junked cars being brought to the lots. For instance, hundreds of cars were parked at Sendai Airport when the tsunami struck, and afterward their owners came to look for them but couldn’t find them. Local governments have to somehow inform those people where the collected automobiles are being kept, and it’s time-consuming. But that’s not the end of the process. As one mechanic told TBS, before the car is scrapped and placed in a compactor, all the mud has to be removed from the interior. (Removing the gasoline isn’t a problem since it seems that in almost all cases thieves had already siphoned off the fuel when the tow trucks showed up.) Before scrapping, the engines are removed and can sometimes be recycled, but not in this case. Sea water effectively destroys automobile engines.

If anyone benefits from this aspect of the tragedy it is, of course, automakers. Since the eco point system ended last year, manufacturers have been looking for a means to boost sales, and now they have an instant customer base of hundreds of thousands of potential buyers. The central government is going to help with a bill that will provide certain tax exemptions for victims of the earthquake/tsunami. Any victim who purchases a car, either used or new, will not have to pay the automobile purchase tax; nor will they have to pay the regular car tax based on weight, which is due when you register the car and every time you bring it in for mandatory inspections. Already, there is a paucity of available vehicles for sale in the Tohoku region, a situation exacerbated by production fall-offs nationwide due to a shortage of parts that are made in the Tohoku region. However, today Toyota announced that it would resume car production on April 18. There’s no time to lose.

Earthquake insurance put to the test

Tuesday, April 5th, 2011

Though property insurance for damage caused by earthquakes is available in earthquake-prone Japan, there is, technically speaking, no such thing as earthquake insurance. Thanks to a deal struck by the national government and private insurers in the 1960s, individual homeowners who take out fire insurance policies can add a rider for earthquakes (which also includes tsunami and volcanos). Claims are paid out of a large fund that is maintained by the two partners, and according to the Nihon Keizai Shimbun this fund currently contains ¥2.3 trillion. The insurance industry projects that there will be about 500,000 claims filed for property damage, amounting to ¥1 trillion in payouts.

Damage assessed; next step, compensation (Yoshiaki Miura photo/The Japan Times)

So there’s enough money in the fund to cover at least private individual claims. However, when you look at the policies in detail these payouts will not be enough to recoup much of what was lost in the disaster. Available fire insurance policies(kasai hoken) for private homes cover up to ¥50 million if the entire home is destroyed (zenkai), and people can insure other property, such as furniture, for up to ¥10 million. However, earthquake insurance only covers 30 to 50 percent of what fire insurance covers. So if the coverage of your fire insurance policy is ¥10 million, you only receive from ¥3 million to ¥5 million when the home is destroyed in an earthquake. Moreover, damage insurance only covers the value of the home at the time of the accident or disaster, so if the value has decreased over time, you will only receive payments based on that lesser value. And fire insurance by itself usually does not cover a fire caused by an earthquake. You need coverage for both.

It’s assumed that the average payout in the Great Eastern Japan Earthquake for homes with coverage will be between ¥2 million and ¥3 million. The average damage insurance payout for the Great Hanshin Earthquake was a bit over ¥1 million per home. Altogether 65,000 claims were made for a total of ¥78 billion. At that time, only 9 percent of homes nationwide carried earthquake insurance, and only 3 percent of homes in Kobe did. Since then, the national portion has increased to 23 percent. In 2009 alone, 46.5 percent of homeowners who took out fire insurance added earthquake coverage. Not surprisingly, sales vary widely from one region to another based on frequency of temblors. In geologically active Aichi, Tokyo and Miyagi, as much as 30 percent of homeowners have earthquake insurance. The portion drops down to 15 percent in Gunma and Nagano prefectures.

One bright spot is that the utter destruction of the disaster may actually speed up the claims process. After the Hanshin earthquake the process took a long time because insurance companies had to assess the damage to properties in order to decide if they were “totally destroyed” (zenkai), “half destroyed” (hankai), or “partially damaged” (ichibuson). These are the only three categories for payouts and determine the amount of the payout. Because of the utter destructive power of the tsunami that destroyed much of the coastline of the affected area, the General Insurance Association of Japan, which represents all damage insurance companies, is assessing properties in a joint manner from the air, where it becomes apparent that all homes in a given area are zenkai. There is no need to check each property on the ground. In addition, policy-holders will not be required to bring in their policies to make claims, since so many lost documents in the tsunami. All they need to provide is identification. Even if a claimant forgets which company his policy is with, the association will find out.

Still, some policy holders could be in for a shock when they read the fine print. For instance, homeowners in Urayasu, Chiba Prefecture and other localities where houses were damaged by liquefaction may discover that their earthquake policies don’t cover that particular eventuality. But the Life Insurance Association of Japan has risen to the occasion. Most general life insurance policies don’t cover deaths from earthquake, but the association has said that its member companies will make an exception for the current disaster.

Small businesses ask for restraint with the self-restraint

Saturday, April 2nd, 2011

Normally this time of year people are in a party mood, what with the cherry trees blooming, temperatures rising and students on spring break. That mood has been effectively dampened by the enormous suffering up north, but recreation in general is being discouraged by several related factors, such as the call for energy conservation and reduced public transportation. Small businesses, especially restaurants, bars and events promoters, are being hit the hardest, even if their enterprises were not affected directly by the earthquake.

Sign in Ueno Park says that the cherry blossom festival is "canceled," asks for "self-restraint."

They certainly don’t appreciate the well-meaning but short-sighted official requests for jishuku, or self-restraint. Making such a request sounds paradoxical: Can self-restraint be compelled from above? At a press conference on April 1, Renho, the Democratic Party of Japan lawmaker who was put in charge of energy conservation, blasted Tokyo governor Shintaro Ishihara for a remark he made implying that it’s unseemly for people to want to “drink and chat” at a time like this. Renho said that Ishihara shouldn’t use his political platform to “restrain people’s freedoms and social activities,” which have negative economic consequences.

According to the Fuji TV morning show, “Toku Da Ne,” as of April 1, 1,320 concerts and other events featuring foreign performers had been canceled due to fears of radiation from the damaged Fukushima power plant. In fact, one events company has already gone out of business as a result, and that company is headquartered in Fukuoka.

Those cancellations can’t be helped. What’s more problematic is that many Japanese are being made to feel guilty about going out and spending money. Fuji TV cited a survey of 301 small businesses in Tokyo. Eighty percent said that their business has fallen off sharply since March 11. So one French restaurant decided to buck the whole jishuku movement and started advertising a 30 percent discount on all meals for the time being. They’ve been packed ever since.

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Tales of reconstruction: How do you assess damage of this magnitude?

Monday, March 28th, 2011

Last week, the central government said it would pick up the tab for almost all of the rebuilding in the coastal areas of northeastern Japan devastated by the earthquake and tsunami of March 11. This is obviously a big relief to local governments in the affected cities and towns, many of which saw entire infrastructures wiped out in a matter of minutes.

This property condemned: Building damaged in 2007 Ishikawa earthquake

The stickier problem is what to do about private property. Residents’ possessions, including homes, are spread out over vast expanses of no man’s land. To clean up the mess, laws regarding private property will have to be bent or even ignored. The government has already issued guidelines for the cleanup, even though it doesn’t necessarily have a clear understanding of the situation on the ground. But local governments are demanding something be done so that they can get to work. The governor of Miyagi Prefecture asked the Maritime Safety Agency to help it process all the boats and ships strewn over the blasted landscape. As of last weekend, the agency said it had processed 245 vessels but had only “returned” 13 to their owners. The rest were brought to a makeshift area that is causing problems since level land is desperately needed for temporary housing. But with harbors destroyed, there is no place to put the vessels while the agency identifies owners, who are then expected to dispose of them. With more than 6,000 people still listed as missing in Miyagi, something needs to be done quickly.

Continue reading about assessing the damage →

Tepco blackouts roll only so far

Saturday, March 26th, 2011

The Tokyo Broadcasting Service’s main nuclear energy pundit is Muneo Morokuzu, a University of Tokyo professor who used to work for Toshiba. Earlier this week, while a commentator on the morning show “Asa Zuba!,” he was asked by host Monta Mino about Tokyo Electric Power Company’s scheduled blackouts (keikaku teiden), which have been playing havoc with customers’ lives in the Kanto region. “These problems always have the greatest effect on the most vulnerable people,” Morokuzu said.

Home before dark: Machiya Ekimae station on the Arakawa line

His remark seems to be true, though perhaps not in the way he intended it. Since Tepco implemented power outages to save electricity after the failure of the Fukushima No. 1 nuclear reactor caused by the earthquake/tsunami of March 11, certain areas of the Kanto region have been purposely subjected to occasional blackouts. The outages are supposed to be planned and announced in advance, but so far they’ve been sporadic. Announcements are made and then changed on an almost hourly basis. Originally, the idea was to have “rolling blackouts” (rinban teiden), meaning that each targeted area would have its electricity cut off in succession, which sounded like the fairest way to do it. However, it never happened that way, and now the official name of the scheme is “scheduled blackouts.” The affected areas cover Tokyo and eight prefectures, with the blackout plan collecting disparate neighborhoods into five “groups.” But the neighborhoods were never specified clearly, and even if your neighborhood was targeted for a scheduled blackout, you often didn’t know if it was really going to happen until the designated hour arrived.

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