Australian severe storms declared insurance catastrophe as claims soar

Insurance claims filed after the severe thunderstorms, convective weather and hail that struck eastern parts of Australia over the Christmas period, resulting in flooding and property damage, have soared and with more extreme weather events anticipated, the Insurance Council has designated the events an insurance catastrophe.

We reported earlier this week that the Insurance Council of Australia (ICA) has declared a “significant event” for the severe weather that had affected the eastern side of Australia.

Parts of Queensland, New South Wales and Victoria were particularly badly hit and as of December 27th more than 7,500 claims related to the storms had been received across the three states.

Now though, with severe weather having continued and more in the forecast for the eastern states of Australia, the Insurance Council said it has “escalated its response to severe storms impacting Queensland, New South Wales and Victoria since 23 December, declaring an Insurance Catastrophe.”

As of this morning, the number of claims filed with insurers has risen significantly to 18,174 claims related to the storms across Queensland, New South Wales and Victoria, 10,716 of which are from the Gold Coast region alone, the ICA explained.

ICA COO Kylie Macfarlane, commented, “Given the immense scale and destructive nature of these storms across eastern Australia, the Insurance Council and insurers are escalating our response to a Catastrophe level to better serve the immediate and future needs of our customers.

“Insurers expect claims volumes to grow in the coming days as more residents gain access to properties and power is restored to some areas, however, it is too early to understand the cost of the damage.”

Property and auto damage is reported to have been significant and with flooding yet to subside in some areas, while more severe weather is forecast with large hail possible, it seems the claims burden is likely to keep rising and this could become a costly event for the Australian major insurers.

It’s impossible to say whether the industry loss from these storms could reach levels where reinsurance support is called on.

But the generally higher reinsurance attachment points, as well as reduced use of aggregate reinsurance, should help to ensure more of these storm losses stays with the major primary insurers of Australia, than might have been the case just a few years ago.