The massive earthquake and tsunami that hit the northern coast of Japan on Friday could prove to be the most costly natural disaster in history.

AIR Worldwide has estimated the insured cost of the earthquake and tsunami at between $US15 billion and $US35 billion ($14.8 billion-$34.6 billion).

This preliminary estimate does not include estimates of business interruption, vehicle, aviation and nuclear claims.

The severe damage to the Fukushima Dai-ichi nuclear power station is expected to hit UK-based insurer Chaucer, which has a specialist nuclear risk syndicate.

Currently there is a 20km evacuation zone around the plant as seawater is pumped into two reactors in an attempt to cool them and avoid a nuclear meltdown.

Of the foreign insurers, Chartis is expected to be particularly badly hit as the company has about 9% of Japan’s property and casualty market. The company also has a majority stake in Fuji Fire & Marine, which is also expected to suffer an unprecedented number of claims.

Major reinsurers Munich Re and Swiss Re have both said it is too early to assess the impact of the earthquake, although both are expected to incur a considerable number of claims.

Japan’s domestic insurance cover is pooled under the Japanese Earthquake Reinsurance Scheme. Participating insurers share the risks with the Japanese Government, with the Government paying a much larger proportion of the claims if a single earthquake causes aggregate damage of more than ¥1 trillion ($12.06 billion).

The maximum payout in a single year on insurance claims under the scheme is set at ¥4.5 trillion ($54.3 billion). If claims exceed this amount, then the claims are averaged among all claimants.

Munich Re’s share price fell 4.2% on Friday as markets factor in the impact on the reinsurer’s bottom line.

According to Munich Re, the worst earthquake disaster in Japan prior to Friday’s event was the 1995 Kobe earthquake which cost insurers $US3 billion ($2.9 billion). The total cost of the disaster was $US100 billion ($99 billion) with 6340 deaths.

The highest death toll from an earthquake in Japan was the 1923 Tokyo event, with 142,800 killed.

Friday’s earthquake was recorded at magnitude 9.8 making it one of the most severe ever recorded. It occurred just offshore from Sendai, north of Tokyo and created a tsunami with wave heights of up to 10 metres, which struck the northern Japanese coastline and wiped out a number of towns.

Building damage occurred in the northern suburbs of Tokyo and further along the coast.

A natural gas plant in Tokyo is on fire and there were reports of soil liquefaction in a number of regions, including the two Disney theme parks in Tokyo.

The death toll at present has been set at 3200, but this is expected to rise dramatically with the coastal town of Minami-Sanriku alone reporting 10,000 residents missing.

This was just one of a number of coastal town hit by both the earthquake and the subsequent tsunami.