PERILS finalises industry loss estimate for Cyclone Alfred at almost AU $1.88bn

Catastrophe data aggregator PERILS AG has published a fourth and final industry loss estimate of nearly AU $1.88 billion for Cyclone Alfred, which affected the Australian states of Queensland and New South Wales during the period of February 28 to March 12, 2025.

Cyclone Alfred made landfall on March 7, 2025, as a Category 1 cyclone near the Gold Coast in Southeast Queensland after spending several days offshore, slowly moving south.

“By then its strength had diminished significantly from an offshore peak intensity of Category 4. Nevertheless, the combination of long-lasting high winds and heavy rainfall, owing to the storm’s slow forward progress, led to a very high volume of claims. As a result, at AUD 1,877 million, Cyclone Alfred became the largest insured cyclone loss on an as-if -today basis since Cyclone Debbie in March 2017,” PERILS explained.

PERILS’ initial estimate for the event was AU $2.568 billion, reported in April. Then, in June, the firm lowered its industry loss estimate by 12% to AU $2.250 billion.

Then in September, PERILS lowered its insurance industry loss estimate for the event by 14% to AU $1.922 billion.

Now, the final industry loss estimate for the event has lowered by roughly 2.3% to AU $1.877 billion, PERILS has reported today.

PERILS’ final loss estimate for Cyclone Alfred marks a considerably large decline from the organisation’s initial loss estimates, which is quite rare to see in PERILS’ reporting.

In line with PERILS’ coverage definition for Australia, this fourth and final loss number covers the property and motor hull lines of business and is based on loss data collected from affected insurers.

“The loss information in this final report provides a breakdown of property and motor losses in four-digit post code resolution, with the data further divided by personal lines (70% of the total industry loss), commercial lines (26% of the total industry loss) and motor lines (4% of the total industry loss),” PERILS said.

Darryl Pidcock, Head of Asia Pacific & Cyber at PERILS, commented: “Tropical cyclones typically bring very strong winds and heavy rainfall. In the case of Cyclone Alfred, however, wind gusts were not particularly strong and thus the wind alone was not the main loss-driver. Rather it was the mix of prolonged windy weather and heavy precipitation which drove the losses.

“This unusual cyclone character made loss reserving challenging and insurers chose a cautious approach in the early stages post event, as evidenced by the material reduction from AUD 2,568m after six weeks to AUD 1,922m after six months of the event. Since then, loss development has become much more stable, and losses reduced by a mere 2.3% for our final loss number of AUD 1,877m.”

He continued: “Cyclone Alfred is a good example of our work motivation, namely, to increase data availability for natural catastrophe insurance for the better understanding of natural catastrophe risk. As such, we hope that our loss data for this event, including its development over time, will be of benefit to the insurance industry should a future cyclone event with similar characteristics strike.”