Insurance claims are rapidly rising from the extreme rainfall and rising floodwaters impacting areas of the east coast of Australia and local insurers are already warning that their reinsurance is expected to trigger to support their payouts.
The Insurance Council of Australia (ICA) now says that insurers have received close to 31,000 claims from the ongoing flood emergency in South-East Queensland and the New South Wales coast.
It’s a 107% increase on the claims count reported yesterday, which the ICA notes is a much faster rise at this point than was seen following last year’s floods in New South Wales and South-East Queensland.
It continues to be too early to provide any estimates of claims costs, the ICA said, but it is now clear this flood catastrophe in eastern Australia will be the latest to cause some reinsurance layers to trigger and payout.
Given the rate of claims increase, it appears the ultimate industry claims burden will likely be higher than the floods in the prior year.
The March 2021 floods were ultimately seen as around an A$751 million by PERILS AG, who said the industry initially over-reserved for them, as the industry loss total fell from over A$1 billion.
As we reported yesterday, the ICA’s insurance catastrophe declaration extends across parts of New South Wales that have also been affected by the weather event and the weather cell impacting south to the Mid-North Coast of Australia, with the city of Brisbane particularly affected.
This morning, with the claims received more than doubled, insurers are warning of loss impacts.
RACQ, a mutual insurer, has reported 3600 claims from the weather and flooding.
An RACQ spokeswoman told the Australian Financial Review, “The weather event will see RACQ’s reinsurance triggered. This is the first loss against RACQ’s catastrophe cover for this financial year, and as such will have a net cost to RACQ of $50 million.″
She further explained that RACQ’s catastrophe reinsurance program is structured so that the insurer will have a lower deductible for subsequent disaster events.
Suncorp’s claims are now reported at above 10,000, a doubling over yesterday’s reports.
Suncorp said that its maximum retained loss from this event would be around $75 million, which reflects the remaining deductible to trigger reinsurance recoveries under its aggregate excess-of-loss cover.
Suncorp also has quota share reinsurance in place for its Queensland homeowners insurance business.
IAG said this morning that its claims had reached 6,700 across all its insurance brands, also adding that after quota share reinsurance, the combination of its catastrophe reinsurance arrangements means it faces a maximum event retention of $95 million.
Finally, Allianz told the Australian Financial Review that it was facing 4,800 claims, but that it remains too early to tell if it would benefit from any reinsurance support for the flood losses.