The latest update from the Insurance Council of Australia (ICA) reveals that insurers in the country have now received 126,511 claims related to the flooding in Southeast Queensland and New South Wales.
This claims total is as of March 11th, 2022, and represents a 7.2% rise on yesterday’s figure, and is expected to climb higher in the coming days.
According to the ICA, based on previous flood events, the current estimated insurance and reinsurance industry loss now stands at $1.89 billion, compared with $1.8 billion yesterday.
In light of more frequent climate disaster events and against the backdrop of the Australia floods, Poppy Foxton, National Head of Corporate Insurance and Risk Solutions at Honan Insurance Group, said: “Reports indicate that losses could exceed $2 billion, making this one of Australia’s costliest disasters, having widespread impacts on the insurance industry.”
“The immediate impacts include overreliance on the reinsurance market and could see global reinsurers becoming more stringent in their underwriting and impose more restrictions on cover in Australia due to perceived high risk. Coverholders and Managing General Agents delivering losses into markets, such as the London-based Lloyds, may be required to tighten underwriting and limit any new business. Expect to see underwriting moratoriums on new business in some flood exposed regions,” she added.
The overreliance on reinsurance noted by Foxton has been highlighted previously, with analysts warning that reinsurers could assume the majority of the losses, which are nearing the $2 billion mark.
“The consequences of this could be that only a select number of insurers will be able to afford and therefore offer flood cover, meaning a small group will need to support the many, which is unsustainable. Resulting rising costs and limited coverage could drive individuals in flood exposed areas to decide not to take out flood cover, leaving them exposed to risk,” she continued.
In its latest catastrophe recap report, insurance and reinsurance broker has commented on the flood event that commenced in February, noting that additional rainfall fell during the first week of March as a new area of low pressure affected New South Wales over March 7-8. Aon says that the overall economic bill is anticipated to run into the billions.