The earthquake that hit Japan’s Kumamoto prefecture on July 28 will cause the country’s property and casualty insurers limited losses, according to Moody’s.

The 7.1-magnitude quake damaged residential and commercial properties and killed 38 people.

Insurer losses from a similar-magnitude earthquake in the region in 2016 were limited despite large economic losses, Moody’s assistant VP for ratings Kensuke Ogawa says. Reinsurers paid out ¥400 billion ($3.6 billion today) on that event.

Losses from the recent quake may be larger because industry clusters have since increased, driven by semiconductor-related businesses, Mr Ogawa notes.

“That said, we expect the strain on insurers’ profitability to be still limited.”

A government reinsurance program covers insurers’ residential quake risks, but companies will have exposure to commercial risk, which usually excludes business interruption.

Mr Ogawa says insurers’ improving profitability, driven by premium rises for domestic products, strong overseas businesses and gains from divestments, will help absorb losses.