Australian insurer Suncorp gave an initial estimate of its losses from recent severe storms and hail in Australia in October, saying that the upper-end of its estimate is at the point its main catastrophe reinsurance program would kick-in.
Suncorp said the storms and hail struck Australia on 28 and 29 October, impacting its policyholders across South Australia, Victoria and Tasmania.
As a result, by November 3rd, claims filed had reached 12,000, across property and motor lines of business. This figure is expected to rise further.
Because of this, Suncorp said it expects the total cost from this event to be in the range of $225-$250 million, which makes it the biggest catastrophe event of the fiscal year for the company.
Suncorp’s main per-occurrence catastrophe reinsurance program limits individual event retention to a maximum of $250 million with an upper limit of $6.5 billion, so these storms look like they could get close to triggering a recovery under the program, based on Suncorp’s estimate.
At the same time, the severe storms and hail have added to erosion of the deductible sitting under Suncorp’s aggregate excess-of-loss reinsurance cover as well.
Suncorp’s Aggregate Excess of Loss reinsurance treaty (AXL) provides $400 million of cover in excess of a retention of $650 million, only for qualifying loss event costs above $5 million.
For events above $5 million, total net costs are estimated as between $516 million and $621 million, which has led to an estimated erosion of the aggregate deductible of between $456-$561 million, Suncorp explained.
Which means Suncorp could be only $80 million of catastrophe losses away from triggering its aggregate reinsurance protection.
Suncorp has updated its full year outlook for natural hazard costs to between $1.105 – $1.130 billion, above the $980 million budget it had set.
As a reminder, rival insurer IAG said earlier this week that the recent severe storms and hail would drive a reinsurance recovery for the company, as its net loss hit the retention on its catastrophe reinsurance program.