The industry loss to insurance and reinsurance markets from March’s severe flooding that affected New South Wales and Queensland, Australia has now been revised down by just over 13% to A$916 million (around US $700m) by PERILS.
It’s a relatively significant decline in the overall estimated loss to the global insurance and reinsurance market from these floods which hit the eastern region of Australia from 18th to 24th March 2021.
Quickly after the event, a number of major Australian insurers said the flooding could cause them to tap their reinsurance protection.
PERILS then came out with an initial industry loss estimate of A$1.055 billion for losses suffered by the property and motor hull lines of business.
The flood event saw significant river and surface water flooding occur, after a blocking high pressure system in the Tasman Sea interacted with a low-pressure system off north-west Australia that fed moist tropical air into eastern Australia.
The Mid North Coast, and the Hunter and Greater Sydney regions experienced the worst flooding, while parts of south-east Queensland and eastern Victoria were also hit by storm and flood damage.
Over a 7-day period, the New South Wales coastal region experienced the highest recorded rainfall since national records began in 1900, related to this low pressure system feeding tropical air over the landmass. A number of locations along the mid-north coast of New South Wales recording as much as 600-800mm of rain.
Damage from the floods and storms was largely insured across private property and businesses, but losses to public infrastructure, crops and livestock remained largely uninsured.
The decline of 13% in the estimate is quite large for an industry event of under US $1bn, but this just serves to demonstrate the challenges in estimating losses from major catastrophe events soon after they occur and that greater clarity always emerges with time.
The reduction in losses from this event may have had some bearing against the aggregate reinsurance of some of Australia’s largest insurers, potentially reducing the deductible erosion or recoveries a little related to those layers of protection.