Australia’s Halloween 2020 hail industry loss raised to A$1.222bn by Perils

The insurance and reinsurance market loss from the so-called Halloween hailstorm event in October 2020 that struck south-east Queensland, Australia has been lifted slightly to A$1.222 billion by PERILS AG.

The Halloween hail storm event is a good example of a catastrophe or severe weather loss with some uncertainty behind it, as Perils has now both raised and lowered the loss at its estimate updates.

While the other day, the Insurance Council of Australia (ICA) said that inflationary factors have slowed down the response to this catastrophe event and likely increased claims as well.

The hailstorm was originally designated as the first catastrophe to strike Australia of the 2020-21 season by the Insurance Council of Australia (ICA), with an expectation that it could drive a relatively significant loss to insurers and likely erode some reinsurance aggregates.

PERILS had first estimated the potential insurance and reinsurance market industry loss at A$1.231 billion, for the hailstorm event also known as the “South East Queensland Halloween Hailstorms” before then lifting that estimate by 6% to A$1.3 billion.

PERILS then lowered the estimate for this event, dropping it to A$1.173 billion six months after it had occurred.

The ICA raised its estimate to A$1.08 billion last week.

Now, Perils said today it has finalised its loss estimate slightly higher at A$1.222 billion.

It’s important to note though, that the ICA said in its latest update on the Halloween hail storm that claims have continued to be filed, with 1,000 claims submitted in the past eight weeks, so there is room for some more creep it seems.

The hail event occurred after a string of severe thunderstorms developed over South East Queensland during the afternoon of October 31st. The result was large hail as big as 14 cm in diameter in some suburbs.

Severe thunderstorms struck much of South East Queensland that day, including the surrounding areas of Brisbane, the Gold Coast and the Sunshine Coast. But a narrow corridor of storms, from Amberley through to the northern suburbs of Logan near Brisbane, was the area hardest hit by the hail event.

Giant hail was also recorded in the Gympie area, with stones up to 7cm in diameter reported. In addition to hail, damaging winds were also experienced between Redcliffe through to Kingston near Brisbane, with gusts over 110 km/h recorded around Moreton Bay region.

Back in December 2020 we reported that, a number of insurance-linked securities (ILS) funds invested into collateralised reinsurance positions that are exposed to catastrophe events in Australia, reported negative performance for November on the back of reserving for hail storms and severe weather events, which we believed included the impacts of this storm event.

PERILS said today that motor losses made up roughly 11.9% of the total industry loss, while 88.1% were due to losses in property lines of business.

Darryl Pidcock, Head of PERILS Asia-Pacific, commented, “Given the severe convective storm activity in October of this year, the industry did not really need a reminder that hail can cause major damage to insured property and cars. This highlights the importance of our final industry loss footprint for last year’s Halloween Storm to support the industry’s understanding of hail vulnerabilities and the calibration of Hail Cat models. From a historical perspective, 2020 was an active year for major hailstorms and the season 2021/22 has just begun with a series of hail events along the NSW and QLD coast coinciding with the launch of our new real-time industry loss estimator Hail-Jeannie.”