At least one set of experts pegged the insured loss as high as $35 billion just from the earthquake and subsequent fires alone.
Impact at the New York Stock Exchange: Investors rushed to sell their insurance shares after estimates the Japan earthquake could cost the industry nearly $35billion were revealed.
The damage from the tsunami will add millions to the figure.
Insurance indexes in both the U.S. and Europe underperformed in the broader market. Shares of carriers with specific exposure to the market like MetLife Inc and Aflac Inc fell, as did those of top global re-insurer Swiss Re and rivals Munich Re and Hannover Re.
Risk modeling agency AIR Worldwide said the earthquake, which struck northeastern Japan on Friday, could result in an insured loss of between $14.5billion and $34.6billion.
Like a toy tossed carelessly across a child's room, a ferry balances precariously on the roof of a house in the devastated fishing village of Otsuchi
Grim: The Japanese army search for bodies in Higashimatsushima City, in Miyagi, the state where up to 10,000 people may have died.
The upper end of the estimate would make the earthquake the second-costliest natural disaster for insurers in the last 40 years, behind 2005's Hurricane Katrina.
'Given the nature of the destruction, combined with the ongoing recovery efforts and evacuation areas, it will take some time to estimate the damage,' Swiss Re said.
Estimates of the overall cost of the multiple disasters exceeded $170billion today, and there are still questions about how the ongoing nuclear accident at the Fukushima reactors will affect losses.
Unprecedented disaster: Crisis is biggest for the country since World War II. The tiny men are dwarfed by the scene of devastation around them as they search for victims of the tsunami in Noda village, Iwate Prefecture, northern Japan.
Tokyo: Utility companies are warning of blackouts across the country as they are unable to meet demand
Financial fall out: The Nikkei index fell 6.18 per cent in the first full day of trading after the tsunami. The Yen also fell against the dollar.
Catastrophic: The insurance losses from the tsunami are currently estimated at $14.5billion
Bracing for impact: Estimates of the overall cost of the multiple disasters have exceeded $170billionProperty insurance in Japan generally carries a nuclear exclusion, but it is not clear if Japanese life insurance policies do the same.
Insurers said they did not expect to absorb the cost of earthquake-related damage to the nuclear power facility 240 kilometres north of Tokyo that has stirred fears of a leak of radioactive material across the region.
'Any impacts due to major accidents in Japanese nuclear power plants will not significantly affect the private insurance industry,' Munich Re said.
A person familiar with the situation said nuclear plants in Japan are covered by a domestic insurance pool that excludes both earthquakes and tsunamis from its property and liability policies.
That would suggest Fukushima operator Tokyo Electric Power Co (TEPCO) may not be covered for the results of the accident.
But Chaucer Holdings Plc, one of the world's biggest insurers of nuclear risk, said it did not expect any big claims because the Japanese Nuclear Act of 1961 absolves nuclear plant operators of liability from damage caused by major natural disasters.
Shares of Chaucer, currently in takeover talks with private equity tycoon Guy Hands and other suitors, closed 2.3 per cent higher today, partly reversing an 8.5 per cent fall on Friday.
One industry expert said it would have been hard for any insurer to predict this kind of loss when writing policies.
Carnage: People walk a road between the rubble of destroyed buildings in Minamisanriku town, Miyagi Prefecture, northern Japan, three days after the earthquake with a magnitude of 9.0 struck.
'This was an unprecedented hazard level,' said Gordon Woo, lead catastrophist for RMS. 'This was an extremely rare event and the consequences in terms of the tsunami.'
Some analysts said the disaster, combined with heavy losses has already suffered this year from floods in Australia and last month's New Zealand earthquake, could push up global insurance prices, boosting insurers' shares.
'In our view the loss will be so large that it will probably provide the trigger to ensure a re-rating of the nonlife sector,' Panmure Gordon analyst Barrie Cornes wrote.
Shares in the sector have been under pressure due to persistently weak global insurance prices, reflecting stiff competition between well-capitalised insurers.
A big loss would erode insurers' capital, forcing them to charge more to recoup big payouts to customers.
Last year, analysts polled by Reuters said a natural catastrophe would need to cause an insured loss of more than $40billion to lift prices across the market.
The stock market in Tokyo slumped 6.2 per cent – wiping more than £50billion off the value of Japan’s leading firms – on the first day of trading since the catastrophe.