Australia’s severe flooding that affected South-East Queensland and Northern New South Wales in February and March 2022 is now counted as the third most costly extreme weather event ever recorded in the country, as the insurance and reinsurance industry loss estimate has been raised to AU $4.8 billion.
The increase in the insurance industry loss estimate published by the Insurance Council of Australia represents a 12% increase from its last estimate on June 1st, when the total sat at AU $4.3 billion.
Now, only Cyclone Tracy (1974) and the Sydney hailstorm (1999) are seen as severe weather catastrophes that have caused more insured losses, while this year’s East Coast Flood is now the costliest flood in Australian history.
The increase in the estimate is seen as partly down to inflationary factors, with the Insurance Council citing increases in reconstruction and building costs.
225,000 insurance claims have now been filed from the flooding across both states, which is up 3.6% on the figure announced at the start of June.
“However, as claims assessments continue to be completed, insurance costs for the event have increased 12 per cent on last month, driven in part by increasing materials and labour costs,” the Insurance Council explained.
Roughly 30% of flood insurance claims have already been closed and $1.5 billion has already been paid to policyholders.
Around 125,000 claims from the flood events were to residential property, the Insurance Council estimates.
Andrew Hall, CEO, Insurance Council of Australia commented, “The sheer scale of the extreme weather event that devastated Queensland and New South Wales is something we have never seen before, and the cost continues to rise.
“Money is flowing into these devasted communities with $1.5 billion already paid and this number increasing every day.
“Insurers are working hard to resolve claims as quickly as possible and have put on hundreds of extra staff to support claims processing as delays not only impact the policyholder, in most cases they also add costs to the insurer.
“Past experience has shown us that local councils need to be looking at what they can do to process the higher than usual number of development applications we expect to see as a result of this flood.
“The time it takes for some property claims decisions to be made has been a consistent issue raised at our policyholder forums in New South Wales and Queensland.
“There are clear obligations and regulations on insurers around claims, but ultimately the type of claim, the assessment required and the complexity of the repair or rebuild can impact that process.”
We updated on Youi yesterday, as the company’s owner said all its flood claims would fall under its reinsurance arrangements.
Reinsurance capital sources are expected to bear the brunt of these flood losses, according to rating agency AM Best.
PERILS AG had hiked its insurance and reinsurance industry loss estimate by 23% to almost AU $4.9 billion recently, after extending its definition of the event loss period for the 2022 Australian flood catastrophe.
It’s challenging to compare the two estimates, given there are different periods of time covered, it appears, as the ICA said flooding later in March in Lismore could result in claims included in its figure, where as PERILS event loss period ends on March 11th.