Industry loss from October storms in Australia estimated over A$1bn

The insurance and reinsurance market loss from severe storms that struck southern Australia in late October 2021 is already estimated to be over A$ 1 billion by data aggregator and reporting agency PERILS.

The severe and convective storms struck South Australia between October 28th and 30th 2021, as low pressure system moved in a south-easterly direction across southern Victoria and Tasmania.

The associated cold front of the low brought widespread damaging hail, wind, drainage flood damage and severe thunderstorms which impacted populated areas in the three states, including the major urban centres of Adelaide and Melbourne.

The Adelaide region of was the first area to be hit by the storm system on 28th October, experiencing heavy hailstorms and strong winds in the city and surrounding areas. The storm front then travelled towards Victoria during the night and into the morning of 29th October, driving heavy rainfall, hail and strong wind gusts of up to 146 km/h.

Tasmania was impacted by the frontal low during the morning of 29th October with strong winds and torrential rain.

The storms drove widespread damage to homes and cars from hail, strong winds and torrential rainfall, while there was also extensive power disruption affecting up to 526,000 homes and businesses in Victoria and 30,000 in South Australia.

Property damage from the storms is widely covered by insurance, with losses mainly relating to property and motor hull lines of business, but also with contributions from crop insurance which Perils does not report in its data.

Insurer IAG said that storms at this time caused losses above its reinsurance retention, while Suncorp said the upper-end of its estimate for these storms is at the point its main catastrophe reinsurance program would kick-in.

Darryl Pidcock, Head of PERILS Asia-Pacific, commented, “The losses to the insurance industry from the Southern Australia Severe Storms were typical for this kind of spring storm in that they were generated by a combination of hail, wind and surface water flooding. The main cause of damage differed by region but was driven by the same low-pressure front sweeping across the three states. The event added considerable losses to an already challenging month for the insurance industry following severe weather outbreaks nationally in October. For the state of South Australia alone, the storm will likely be one of the costliest natural catastrophes ever.”

PERILS loss estimate for the period of storms cover both property and motor hull lines of business and the initial industry loss is pegged at A$1.028 billion (approx. US $740m), a figure that will be updated in three months time.