Claims estimates from tropical cyclone Debbie continue to rise today, with the latest estimate of claims now at AU$386 million, while insurer IAG has become the first to explain the impact to it and said that its 2017 catastrophe reinsurance and its aggregate reinsurance layer would both pay some of the claims.
The Insurance Council of Australia (ICA) said today that 30,370 claims have now been reported, with an estimated cost to the insurance and reinsurance industry of AU$386 million (US$295m). That’s up from the AU$306 million (US$235m) reported just the day before.
Australian primary insurance giant IAG has reported the expected impact to it, saying that it anticipates a net cost to it of AU$140 million, resulting from 4,300 claims received at this time.
Peter Harmer, IAG Managing Director and CEO, commented; “This is a highly unusual and complex event with the devastating effects still being felt across North and South East Queensland, Northern New South Wales and New Zealand.”
The net impact revealed is after IAG’s expected use of its reinsurance arrangements, which look set to be relatively significant, as the insurer said that it would claim on its fiscal year 2017 specific catastrophe cover, with an “expected full utilisation of the FY17-specific reinsurance cover of $96 million, which applies to net natural peril claim costs immediately above $680 million.”
Additionally, IAG said that cyclone Debbie has eaten further into its aggregate layer of reinsurance, saying that as a result its maximum exposure to any future events in this fiscal year has been; “Reduced to $20 million owing to activation of the calendar 2017 aggregate sideways cover which, after Tropical Cyclone Debbie, contains approximately $320 million of remaining protection, with qualifying events capped at a maximum contribution of $180 million excess of $20 million per event.”
Following cyclone Debbie, IAG has upped its estimate of net natural peril claim costs for the current financial year to $850 million, compared to its previously held assumption of $680 million.
IAG’s estimate of a net cost of AU$140 million suggests that the estimates coming from the ICA will rise significantly. It still remains uncertain how high the loss from tropical cyclone Debbie will go, but market sources continue to suggest something in the range of AU$1 billion to comparison’s with 2011’s cyclone Yasi at AU$1.4 billion.