ICA highlights billion dollar loss potential of Australian floods
The Insurance Council of Australia (ICA) has highlighted the billion dollar insurance and reinsurance market loss potential of the ongoing severe flooding event and storms in the Queensland, New South Wales (NSW) region of Australia.
The flood waters continue to rise after more than 1 metre of rainfall has fallen in some areas, flooding hundreds of properties.
With further torrential rainfall expected today, Tuesday, concerns are rising for western Sydney where the Warragamba Dam is expected to overflow for as much as one week.
18,000 people remain evacuated, with a further 15,000 on evacuation watch and the toll is rising for insurance and reinsurance interests as this flood event continues.
As we explained yesterday, our sources suggested that Australia could be looking at another billion dollar catastrophe industry loss event and that reinsurance carriers would pick up some of the bill from the flooding and associated storms.
Now, the Insurance Council of Australia (ICA) has highlighted the billion dollar insured loss potential of the floods, saying that while “it is too early to estimate the cost of the damage as access to inundated properties is restricted and many remain isolated, however as a point of comparison insurers paid out almost $1 billion in relation to the February 2020 east coast storms and flooding event.”
The ICA said that the areas with the most insurance claims so far include the NSW mid-north coast towns of Port Macquarie, Kempsey, Laurieton, and Taree, and west of Sydney around Penrith and in the Hawkesbury-Nepean valley.
The majority of households have flood insurance cover in Australia, as it has to be explicitly excluded from policies and many carriers won’t bind cover without flood being included.
However, the ICA noted that, “most residential policyholders who have opted out of flood cover will still be covered for storm-related damage and are encouraged to contact their insurer to obtain an assessment of their particular circumstances.”
Concerns are also rising for Southeast Queensland where the ICA has also noted that a catastrophe declaration could be warranted, but said it is liaising with members on that.
Andrew Hall, CEO of the Insurance Council of Australia said, “This remains an active natural disaster and it will take some time to gain a clearer picture of the damage.
“Insurers expect a large number of claims will be lodged in coming days as property owners begin returning to homes and businesses.
“We encourage policy holders to contact their insurer as soon as practically possible even if they have not been able to return to their home.”
There is a growing expectation that insurers will certainly benefit from their quota share reinsurance protection for this event, but also that some excess of loss reinsurance recoveries are also likely.
Right now, it’s assumed that QBE would be the least exposed of the major carriers, given its commercial property focus, while IAG and Suncorp would be expected to take a more significant burden from the floods.
Also read: Australian NSW floods & storms have billion dollar industry loss potential.
ICA highlights billion dollar loss potential of Australian floods was published by: www.Artemis.bm
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