The latest data on claims and expected industry losses from the ongoing bushfires in Australia shows that the insurance and reinsurance market loss has risen another 15%, to reach A$1.9 billion (around US $1.3bn).
As more claims continue to be filed, costs are escalating from the bushfires that struck Australia over recent weeks.
These fires are thought to be the most costly insurance and reinsurance market loss from the peril ever, with this new 15% increase in costs cementing the bushfire disaster among Australia’s most costly natural catastrophe losses.
Insurance and reinsurance broker Aon had previously explained that at A$1.6 billion the bushfires burning from November represented the costliest bushfire event ever in terms of insurance market losses.
Previously, the Black Saturday bushfires from February 2009 were considered to have been the most costly insurance and reinsurance market bushfire event at around US $1 billion.
Now, this bushfire disaster is reported to have resulted in A$1.9 billion (around US $1.3bn) of claims as of February 14th by the Insurance Council of Australia, up 15% on its last report.
The number of claims filed has risen by 17% in the same period, to reach 23,362.
The fact claims have risen faster than estimated insured losses might suggest the total cost has further to go and as in all bushfire disasters the final loss tally can take some months to establish.
The ICA’s latest figures still show 81% of claims as occurring in New South Wales, 8% in South Australia, 8% in Victoria and 3% in Queensland.
As the industry loss continues to rise from these bushfires, it also increases the chances of reinsurance and retrocession market impact, as well as attrition to certain ILS fund positions on aggregate layers in the market.
Already, Australian primary insurance giant IAG was the first to report that the ongoing bushfires in Australia triggered its aggregate reinsurance protection. The insurer then highlighted significant reinsurance recoveries in recent days.
Suncorp followed up this week, saying that so far claims from the bushfires had not reached its reinsurance arrangements but that its drop-down and aggregate reinsurance could come into play with as little as another A$50 million of claims perhaps tipping the balance. This insurer also highlighted that around half of its aggregate reinsurance had been eroded by catastrophes in the last week.
On the retrocession side, it had seemed unlikely that there would be too much impact, aside from through some major reinsurers sidecar vehicles or private quota shares which was likely to be largely attritional unless the industry loss spiked further.
However, collateralised retrocession manager Markel CATCo did report recently than some of its capital had been trapped due to the bushfires, suggesting the potential for some others to perhaps face similar.
Also, ILS fund manager Twelve Capital said recently that one private ILS contract it had underwritten was exposed to potential losses from the wildfires, suggesting there could be more similar ILS exposure in pockets around the marketplace.
Alongside other catastrophe events, including hail storms this year, as well as severe storms and flooding, Australia’s insurers have faced an expensive few months and their reinsurance carriers are increasingly being called on for support.
As the losses continue to rise, this reinsurance support may rise with them.