October 2020 Queensland hailstorm industry loss said A$1.231bn

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The insurance and reinsurance market loss from the October 2020 south-east Queensland, Australia hailstorm event has been preliminarily estimated at A$1.231 billion by PERILS AG.

Hail stonesThe hailstorm was designated as the first catastrophe to strike Australia of the 2020-21 season by the Insurance Council of Australia (ICA), with an expectation that it could drive a relatively significant loss to insurers and likely erode some reinsurance aggregates.

It turns out to have been a costly event, as PERILS pegs its initial estimate at A$1.231 billion, for the hailstorms which occurred on October 31st 2020, an event also known as the “South East Queensland Halloween Hailstorms.”

PERILS estimate is based on insured property and motor market loss data collected from insurers operating in Australia.

The hail event occurred after severe thunderstorms developed over South East Queensland during the afternoon of October 31st, with hail as large as 14 cm in diameter reported in some suburbs.

PERILS notes that this was an extreme event for the region, given the size of the hail and the extensive damage caused.

Severe thunderstorms affected much of South East Queensland, including the surrounding areas of Brisbane, the Gold Coast and the Sunshine Coast, but a corridor from Amberley through to the northern suburbs of Logan near Brisbane was the area hardest hit by the event, the company explained.

Giant hail was also recorded in the Gympie area, with stones up to 7cm in diameter reported. In addition to hail, damaging winds were also experienced between Redcliffe through to Kingston near Brisbane, with gusts over 110 km/h recorded around Moreton Bay region.

Darryl Pidcock, Head of PERILS Asia-Pacific, explained, “This is the third hailstorm event in Australia reported by PERILS for 2020, with total industry losses over AUD 3,640 million across the respective hail events. The South East Queensland Halloween Hailstorms were a particularly noteworthy event given the sheer size of the hailstones in some areas and its relatively early occurrence in the 2020/21 summer season.”

As an early storm in the season this loss event, while impactful for insurers is unlikely to be so costly for reinsurance capital.

With many aggregate reinsurance programs and deals starting their cover inline with the beginning of the catastrophe season, this is likely to be an event that erodes aggregate deductibles for some of the major Australian insurers, but not one that drives too much loss direct to reinsurance capital providers.

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