Flood insurance bill exceeds the Newcastle earthquake

The damage was so great that places from small shops and pubs to big Bunnings outlets and even the Mirvac-owned shopping complex in Brisbane were swamped by floods that stretched from Gympie to Sydney in February and March.

Claims ranged from water damage to losses in business interruption insurance.

The Immigration and Naturalization Agency said more than 20 percent of the claims had already been completed and nearly $1 billion had been paid to policyholders. “Keeping Australia insurable as extreme weather events intensify requires governments to invest in appropriate physical mitigation and adaptation strategies,” the report said.

The high bill for this disaster comes after insurance companies generally began covering floods after the 2011 inundation, sparking a huge backlash in the sector after customers found they were uninsured for floods.

Adjusted to 2017 dollars, the 1999 hailstorm in eastern Sydney remains Australia’s most expensive insurance disaster at $5.57 billion. Then comes Hurricane Tracy, which smashed Darwin in 1974 and cost $5.04 billion, while in third place was Hurricane Dina in 1967, which hit southeastern Queensland and northern New South Wales and cost nearly $4.69 billion.

Morgan Stanley analysts said last month that the costs of natural disasters have been increasing in Australia since 2008, although the 2013-to-2018 period has been quieter.

“Peak periods of losses from $4 billion to $7 billion come more frequently. But losses also rise even during El Niño periods or drier weather, and so we believe that the baseline level of disaster losses has increased,” they said in a client note.

“The past few years have been taking losses for global reinsurers that support the Australian general insurance market, so we believe this means that home insurers (Suncorp and IAG) will have to take on more catastrophic risk fluctuations in their earnings as well as pay more for reinsurance coverage. Their own “.

Morgan Stanley said that while insurers were “investing significant efforts” to combat disaster risk, “an issue of this magnitude is difficult to manage.”

We believe disaster risks get worse before they get better. Domestically, insurers need to price catastrophe and higher inflation.

Suncorp renews reinsurance on a fiscal year basis. The main IAG disaster program is completed in the calendar year, while the overall cover, which protects it from the accumulation of small disasters, is replenished in the financial year.

It’s among various potential pressures facing the insurance sector, as wreck repairers seek to renegotiate higher fixed-rate deals with insurance companies to repair crash-damaged cars.

The AMA interest group said this week that inflationary pressures on auto parts and employment are expected to remain high next year.

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