Australia’s flooding catastrophe event continues and has spread, with the Insurance Council warning that its estimate of losses has already reached A$254 million as of early today, while its designation of the catastrophe event has expanded to include South East Queensland.
As of early today, the number of claims filed and recorded by the Insurance Council of Australia (ICA) had passed 17,000.
15% of the claims filed so far are from the Queensland area, hence the expansion of the designated catastrophe event to include parts of that state.
Previously, the ICA had declared a flood catastrophe event for large parts of New South Wales.
The main concerns continue to be around western Sydney, but with flood waters spreading the expectation is that claims will rise and perhaps significantly, as it remains early days for filing given the ongoing event.
The ICA has estimated an initial insurance and potentially reinsurance market loss of A$254.2 million, which is based on the average cost of claims from previous similar events, not the actual cost of claims filed.
IAG, which is Australia’s largest general insurer, said that as of this morning local time it had received 5,811 claims for damage to homes, properties, and vehicles.
That’s up significantly from the 2,100 claims IAG had reported as of Sunday.
The expectation continues that this will prove to be the latest reinsurance event after a catastrophe in Australia.
S&P Global Ratings highlighted that while the Australian flooding will drive an influx of claims for the country’s property and casualty (P&C) insurers, it is not expected to hurt their credit quality.
Supporting their credit quality is reinsurance capital and the major Australian P&C carriers have ample in-force for this kind of event.
“While the ultimate losses for individual insurers will vary–depending on their exposure to the hardest hit areas, the declared number of events, and the structure of their reinsurance arrangements–we expect these to be manageable,” S&P explained.
Adding, “We expect it will take weeks for many claims to be lodged. Nevertheless, we believe that Australia’s P/C insurers are well-placed to assess and meet claims that arise with reinsurance protection shielding the larger insurers from outsized losses.
“The three largest primary insurers have relatively low retentions, in the A$150 million to A$250 million range, before catastrophe reinsurance kicks in.”
Those low catastrophe retentions may prove vital for some insurers with these floods, enabling them to claim on occurrence towers.
There is also a chance of further aggregate tower deductible erosion and perhaps some aggregate reinsurance recoveries, depending on how high claims rise.
Floodwaters continue to rise in some areas and the peak may still be a day away as waters surge down rivers. But rainfall levels have tapered off a little, suggesting the worst from this specific catastrophe event may soon be behind the affected region.