The severe flooding and storms affecting parts of Australia have already been counted to have driven insurance claims amounting to A$385 million and this number will rise significantly.
The Insurance Council of Australia (ICA) said this morning that it has counted 25,681 insurance claims to-date with an estimated loss of A$385m, due to the floods and severe weather catastrophe across parts of New South Wales and Queensland.
Flood waters are now beginning to subside and rainfall levels have dropped, but claims are expected to continue to be filed over the coming days and weeks.
Insurer IAG has reported that it has received roughly 8,000 claims, as of yesterday afternoon (March 25th), but expects the number to rise.
The claims are largely related to property damage, the insurer said, and based on its exposure and the claims received to-date IAG estimates the net cost of the floods and weather at approximately A$135 million.
That’s after IAG has shared a portion of the losses with its quota share reinsurance partners and the bill is estimated at A$200 million pre-quota share, the carrier said.
IAG said that its net costs from the flood event will be capped at A$169 million, which is its maximum retention per-event, for a first event, under its 2021 catastrophe reinsurance program.
IAG also explained that its net catastrophe claim costs for the eight months to 28 February 2021 were around A$375 million.
After this March flood event and based on an expectation of seasonally lower perils costs in Q2 of the calendar year, IAG estimates FY21 net natural perils claim costs of approximately $660 million to $700 million, which would take it just above its allowance of $658 million for this period.
This is based on an assumption of an estimated $150 million to $190 million of losses from additional catastrophe events in the months of March to June 2021.
IAG noted that it has its FY21 stop-loss reinsurance protection for retained natural perils claims, covering it for $100 million in excess of $1.1 billion ($68 million in excess of $743 million, post-quota share).
Finally, IAG also highlighted its aggregate reinsurance cover, saying that this provides provides $350 million of reinsurance in excess of $400 million (pre-quota share).
Individual events are capped at $200 million, in excess of $50 million from 1 January 2021 and as a result, IAG expects that the heavy rain and flooding event will erode around $150 million of the $400 million deductible on this aggregate reinsurance tower.
Insurer Suncorp also highlighted its claims this morning, saying that it has so far received over 5,400 claims across New South Wales, Queensland and Victoria, of which 80% are in New South Wales and more than 85% of total claims are related to property damage.
The insurer said that claims will continue to rise over the coming days. While Suncorp did not detail any potential reinsurance impact, its quota shares will respond and its low retentions may mean some reinsurance claims are also warranted, once the full bill is known.
Finally, insurance and reinsurance broker Aon said that, “The number of claims and resultant losses will further increase; perhaps significantly and approaching AUD1 billion (USD760 million) in New South Wales alone.”
With the flooding affecting Queensland and Victoria as well and claims coming in from these regions, it does seem likely the ultimate industry loss from this event will surpass A$1 billion.
Aon noted, “The overall economic loss, including damage to infrastructure and agribusiness, will be much higher than the eventual insurance industry impact. It is expected that the economic loss will well exceed USD1 billion. Flood events typically result in a higher protection gap given challenges around underinsurance and lack of proper take-up.”