Sydney hailstorm property insured loss rises 21% to A$766m: PERILS

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The property loss from the December 2018 hail storm that struck the Sydney and surrounding area of Australia has been increased by 21% to a new estimated insurance and reinsurance market loss of A$766 million (US$530m) by PERILS AG.

Large hail image from D-7 RoofingIt’s worth reminding you that PERILS only tracks insured property losses in Australia, hence this estimate is far below the overall market wide loss that includes automotive damage and other lines of business, which were significant factors in this hailstorm event.

PERILS had estimated the property market insured loss at A$633 million back in January of this year.

The estimate is for the December 20th hailstorm that hit the Sydney area, as well as further severe storms that hit south-eastern Queensland on 21st and 22nd December 2018.

The majority of the losses reported were in the greater Sydney area, after the hail storm struck the Sydney, Central Coast and South East Queensland areas of Australia, damaging residential and commercial properties and autos.

For comparison, the latest loss estimate for the Sydney hail storm alone from the Insurance Council of Australia in April was A$1.271 billion, which included the insured auto damage and other lines.

Perils has provided a market loss footprint for the hailstorm event.

Darryl Pidcock, Head of PERILS Asia-Pacific, commented, “This market loss footprint for the Sydney Hailstorms perfectly illustrates the PERILS value proposition. Our goal is to increase data availability for natural catastrophe events to help better understand and manage natural catastrophe risk. This report also breaks new data ground in that it is the first time that an Australian hail event has been provided in such granularity for both losses and intensities. Reliable historical data are the fundamental base of any meaningful Cat risk assessment.”

He added: “We are grateful for the ongoing support of insurers, particularly as the preparation of detailed loss information took place during the busy financial year end and reinsurance renewals period. We hope to repay some of that effort through the provision of high-quality industry data, assisting the market to manage Cat risk in a sustainable manner.”

The Sydney hail event had ramifications for the reinsurance sector and perhaps some ILS players, as IAG said its claims from this hail storm would drive a loss at least in-line with its maximum first event retention, after taking into account its quota share reinsurance as well.

Suncorp said its losses would exceed its reinsurance program’s first event retention, triggering a payout, and also said the event would eat through its aggregate reinsurance layer retention.

In addition, we reported a number of insurance-linked securities (ILS) funds were expecting to experience some loss impacts due to the Sydney area hailstorm, through quota share arrangements and collateralized participation in Australian insurer reinsurance programs.

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