Insured losses from April 2020 hailstorms in Queensland creep to A$604m

Hailstorms that struck the Central Queensland region of Australia on April 19th 2020 are now estimated to have cost the insurance and reinsurance industry A$604 million by PERILS.

The insurance and reinsurance industry loss reporting agency had not given a loss estimate for this particular hailstorm event before, as initial discussions with the market suggested that its losses would not rise high enough to surpass the A$500 million loss reporting threshold that PERILS has set in Australia.

So PERILS didn’t collect data from insurers in the region from this storm event. But as the industry knows only too well, losses can creep higher and in this case PERILS cites “unusually late and significant claims development” which has caused it to deliver a loss report for the event.

This hailstorm event resulted from severe thunderstorms that developed over the Central Highlands and Capricornia districts in Queensland on the afternoon of Aprilth.

Hail as large as 8 to 10 cm in diameter was reported and the storm was deemed unusual both for the overall size of the hail and the fact that it occurred late in the season.

The largest hail impact was recorded in Rockhampton and Yeppoon, where the storms caused extensive damage primarily to residential homes and commercial properties, PERILS explained.

In addition, wind gusts of up to 100km/h were also recorded in Mackay. Crop damage was also reported as some agricultural areas in the region were hit by hail related to the storms.

Property damage made up 95% of the total insurance market losses, PERILS said, split as 79% residential property and 16% commercial property respectively. Motor losses, personal and commercial lines combined made up the remaining 5% of the industry loss.

This hail event came on the back of a costly summer for Australian insurers, with a number of the major players calling on their reinsurance protection to support them in paying claims to customers.

In particular, the frequency of catastrophe events triggered aggregate reinsurance programs for some of the largest Australian carriers, which this hail event may have exacerbated.

Darryl Pidcock, Head of PERILS Asia-Pacific, said, “This event was particularly challenging for the industry not only because of the large hail size so late in the season, but also the late and significant claims development. Notwithstanding, with the support of our insurance partners during challenging times, PERILS has been able to produce this footprint which will be the second Australian hail event released this year which is divided into residential and commercial property and motor lines at postcode resolution. This report will further enhance the understanding of the peril and contribute to improvements in understanding and modelling of hail.”