The insurance and reinsurance industry loss from the severe flooding that struck eastern regions of Australia in February and March 2022 has now been hiked significantly by PERILS AG, with its latest loss estimate now pegging the event at nearly AU $6.3 billion (roughly US $4.33bn).
It’s a significant uplift for the loss quantum from the damaging flooding events that affected affected South-East Queensland and Northern New South Wales earlier this year.
The flood event drove reinsurance recoveries for Australia’s major insurance carriers and some international players too, with some losses flowing to collateralized markets and ILS funds.
Back in June PERILS, the industry loss data aggregator, hiked its estimate by 23% to almost AU $4.9 billion (roughly US $3.5bn) on the back of extending the event loss period.
The floods struck both South-East Queensland and Northern New South Wales in late February and early March 2022, with extreme rains and rainfall totals that exceeded historical records in some areas.
When it reported in April, PERILS had said the loss event extended from 23 February to 8 March 2022, but in June it put that term as 20 February to 11 March 2022, so capturing more flood claims within this single event definition.
In announcing its new estimate today, PERILS also said that personal lines property losses represent 62% of the total industry loss, while commercial lines property losses represent 28% and motor losses 10%.
Recently, the Insurance Council of Australia (ICA) raised its estimate for these floods as well, lifting the total to AU $5.28 billion.
PERILS increase to the estimate is quite large and we don’t often see the second and third estimates for a catastrophe industry loss event rising by such high percentages.
Darryl Pidcock, Head of PERILS Asia-Pacific, said, “This event is now the largest insured catastrophe loss event experienced in Australia. The insurance industry continues to deal with many challenges including completing claims assessments, shortages in building labour and supply disruptions driving up claims costs. It remains a very difficult time for policyholders recovering from the flood impacts as well as the insurance industry managing the sheer volume of claims.”
Lukas Wissler, Product Manager at PERILS, added, “The observed loss development from AUD 4,895m in the second loss report to AUD 6,292m in the third is driven by two factors. Firstly, loss estimates collected from affected insurance companies during the interim three-month period increased. In addition, the resolution of the data was also higher with loss information available per postcode and line of business. This is consistent with our standard approach and enables us to carry out a more detailed calculation of the industry loss estimate.”