According to the Insurance Council of Australia (ICA) the insurance and reinsurance industry loss due to Cyclone Debbie has now officially reached AU $1.4 billion (around US $1.1 bn), after the tally of almost 66,000 claims was counted.
The new total released this morning from the ICA includes claims covering a wide swathe of Australia that was impacted by Cyclone Debbie, from far north Queensland to northern New South Wales.
The total remains below the expectations of some in the industry, reinsurance giant Munich Re said that it expects the eventual industry loss from Cyclone Debbie will hit US $1.4 billion, which suggests there will be more claims filed, or that current claims estimates are set to continue rising.
The latest figure is aligned with the latest estimate from Zurich-based catastrophe risk data aggregator PERILS AG, which at the latest update raised its estimate of insurance and reinsurance losses due to Debbie to AU $1.411 billion.
In recent days a number of the world’s largest reinsurance firms have said that they saw rates increase for treaties that were affected by losses from Cyclone Debbie at the recent mid-year renewals.
However, loss free accounts remained largely flat, so it appears that the loss from Debbie has not been sufficient to cause any major turn in reinsurance pricing for Australian accounts.
On that note, the ICA reported that an Australian Senate report insurance has supported calls for the Federal Government to invest at least $200 million a year in natural disaster mitigation and resilience measures, while ICA CEO Rob Whelan said that a report concluded that insurance premiums appropriately reflected the level of risk in Australia .
Risk commensurate pricing is a hot topic right now, given the rapid softening seen in reinsurance markets. Primary insurance lines have not experienced the same levels of softening, but in Australia there have been concerns over the years whether the true catastrophe and weather exposure was being priced in.
Cyclone Debbie struck parts of Queensland and New South Wales, Australia between March 28th 2017 and early April, with the remnant low from the storm also impacted the North Island of New Zealand with rainfall and flooding, causing property damage there as well.
Reinsurance companies have reported losses due to the event, and some ILS fund managers have experienced relatively small hits to collateralized reinsurance contracts and vehicles that have exposure.
At this time it’s uncertain whether any reinsurer sidecars will pass on any of the Debbie losses to third-party capital. However with Hannover Re reporting it has passed on some of its claims to retrocessionaires, while other reinsurers are likely to have done so as well, there is a good chance the capital markets will pay a reasonable slice of the total loss.