A catastrophe has been declared by the Insurance Council of Australia (ICA) in the wake of extreme rainfall and rising floodwaters impacting areas of the east coast, while insurers are warning of rising claims.
The catastrophe was first declared just for Southeast Queensland, which had been hit by severe weather and flooding since February 21st.
The ICA reported record flood levels in the Mary River system, with water rising to depths not seen since 2013 across many other catchments as well.
By Saturday, claims were already pouring in, Andrew Hall, CEO of the Insurance Council of Australia explained.
“It’s too early to understand the extent of the damage to property in affected areas and to estimate the insurance damage bill, however insurers have received more than 3,500 claims in Southeast Queensland over the last three days,” Hall commented on Saturday.
This morning, the ICA has widened the catastrophe declaration to include parts of New South Wales that have also been affected by the weather event and the weather cell impacting south to the Mid-North Coast of Australia.
The ICA now reports that nearly 15,000 claims related to extreme rainfall have been received by insurers, up 33% in just one day.
With the event still unfolding and claims coming in, it remains too early for any estimates, the ICA said.
Hall said this morning that the costs of the rain and floods will rise, “It’s too early to estimate the insurance damage bill as many property owners remain in evacuation centres and flood waters continue to rise in many areas, or in others recede slowly.
“The insurance industry expects the number of claims to rise significantly as policyholders return to their homes and businesses.”
The flooding is being termed unprecedented and called a “rain bomb”, with river levels reaching near-records and the Brisbane River in Queensland having broken its banks and causing widespread damage.
Some 18,000 homes are reported to have been flooded, so it’s clear the number of insurance claims will rise significantly in the coming days.
The expectation is that this will create a relatively significant insurance market loss, with possible ramifications for some reinsurance arrangements as well.
Water levels continue to rise and the city of Brisbane is expected to see more properties flooded today.
Insurer Suncorp said this morning that it has received over 5,000 claims across both states, with around 70% in south-east Queensland and around 30% in NSW.
More than 80% of Suncorp’s total claims relate to property damage to homes, the carrier explained.
Insurer IAG said that tragically eight people are reported to have died in the flooding disaster and that it stands ready to assist its customers with claims, with over 3,200 received by Sunday night.
Australian insurers, like Suncorp and IAG, have plenty of reinsurance available to support them in paying claims and the way this flood catastrophe is developing it looks like there could be recoveries made.
Suncorp took steps to add more aggregate reinsurance in recent weeks, while IAG is getting closer to the trigger of its aggregate cover.
There’s a strong chance this flood episode could see the pair claiming from their reinsurance arrangements again.
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