Australia flood claims reach $2.43bn, as severe weather continues

The industry loss to insurance and reinsurance markets from Australia’s recent severe flooding and storms is estimated to have reached AU $2.43 billion, by the Insurance Council, but flood impacts continue in the last few days.

The figure continues to rise and estimating the impact was made far more challenging by a second outbreak of flooding at the end of March 2022, which has added to impacts felt in late February.

Now, another torrential rainfall event affecting Sydney and parts of the south and central coasts, occurred in the last few days, further exacerbating the situation and causing additional claims and complication.

Australia’s eastern coast has been impacted by severe storms and torrential rainfall, with the resulting flooding affecting many towns and cities in Southeast Queensland and New South Wales regions of Australia, including Brisbane and Sydney.

Our market sources continue to suggest the eventual insurance industry loss may rise to as much as AU $3 billion, with many international reinsurance market sources suggesting the cost of the first flood episode alone may end up above US $2 billion.

The majority of Australian insurance carriers expect to make reinsurance recoveries for the first period of flooding, while we understand the second flood outbreak has the potential to become a second-event for some aggregate treaties.

The latest data from the Insurance Council of Australia (ICA) shows claims from the floods have risen to 173,346, almost 80% of which are from property related insurance claims.

The flood insurance bill in Queensland is estimated to be around AU $1.3 billion, while New South Wales is estimated at over AU $1.1 billion.

Australian insurers IAG, Suncorp and Youi are already making claims and recoveries under aggregate reinsurance towers for the first flood catastrophe in February, while the flooding in late March and now again in April around Sydney could also complicate the matter and potentially cause additional recoveries to be made for new events.

Reinsurance capital sources are expected to bear the brunt of the flood losses, according to rating agency AM Best, with the continued severe weather and flooding likely to raise the ultimate loss for the reinsurance industry.