Industry loss from Australia’s Jan 2020 hailstorms raised to A$1.9bn

The insurance and reinsurance industry loss estimate for the severe hailstorms that struck the southeastern region of Australia in January 2020 has been raised by roughly 4% to almost AU $1.9 billion.

Zurich based, industry-backed estimator of catastrophe insurance and reinsurance market losses PERILS AG had originally estimated the property market loss from the hail storms as A$670 million back in March.

PERILS then added added motor insurance claims to its industry loss estimate for this hail storm event, providing a truer picture of the overall insurance and reinsurance industry impact and lifted the total to A$1.811 billion in July.

Now, six months on, PERILS has increased the estimate slightly to almost A$1.9 billion, which is its final estimate of insurance and reinsurance market losses from the January 2020 hail storms.

The estimate covers losses suffered from severe hail and convective storms from the 19th to 21st January 2020 and covers storms that struck the Australian states of Victoria, New South Wales, Queensland and the Australian Capital Territory.

PERILS said that the most significant impact from the hailstorms was experienced in Canberra, which saw hailstones falling of up to 6cm in size.

The hail insured losses were split as: 56% from the Australian Capital Territory, followed by Victoria (25%), New South Wales (15%), and Queensland (4%).

PERILS noted that motor insurance losses contributed 42% of the total industry loss, while 58% were from Property insurance lines of business.

Darryl Pidcock, Head of PERILS Asia-Pacific, commented, “This release is the final report for one of the largest Australian hailstorm events in the last 30 years. Given its impact on the industry, we are convinced that the detailed industry loss footprint we have provided today will contribute to a better understanding of hail risk in Australia. The need for detailed loss and exposure data for hail was further highlighted by the two significant hail events in Queensland that occurred later in the year. Together with the January event, these hailstorms have generated more than AUD 3.5bn in losses for the insurance industry in 2020.”

These hailstorms are among the most costly hail industry loss events in Australian history and a share of these losses have flowed to some reinsurance carriers and we understand a handful of ILS contracts as well.

The hail storm losses also hit the reinsurance market, with Australian primary insurer IAG announcing that it would claim under its calendar year 2020 main catastrophe reinsurance program that provides it with per-occurrence protection and would cover the recent hailstorm events. IAG said its gross loss impact could even surpass A$250 million.

Insurer Suncorp also stated that an “unprecedented” start to the season for catastrophe losses (including this hail event) meant it expects to make recoveries across its reinsurance program, including its main program, drop-downs and aggregate reinsurance including perhaps its stop-loss.

A number of the largest insurers in Australia also share their losses from catastrophe events, including this severe hail storm, with global players through their quota share reinsurance arrangements.