How much did Australia’s Christmas storms cost the insurance industry?
How much did Australia’s Christmas storms cost the insurance industry? | Insurance Business Australia
Catastrophe & Flood
How much did Australia’s Christmas storms cost the insurance industry?
Data covers damages across two insurance lines
Catastrophe & Flood
By
Roxanne Libatique
PERILS has announced its initial loss estimate for the insurance industry stemming from the Christmas Storms that struck Australia between December 23 and 29, 2023.
The affected regions included Victoria, New South Wales (NSW), and Queensland.
Australia Christmas storms loss estimate
According to PERILS, the preliminary estimate for insured losses is calculated at AU$1,395 million. This figure includes damages across property and motor hull insurance lines, aligning with PERILS’ definitions of coverage for the Australian sector.
A revision of this loss estimate is expected to be published on March 29, 2024, providing a more comprehensive view three months following the conclusion of the storms.
What happened during the Christmas storms?
The sequence of events leading to this damage involved a prolonged period of severe storm activity, marked by hailstorms, high winds, flash flooding, and tornado occurrences.
These conditions were largely the result of a low-pressure system over southeastern Australia, which, when meeting a stationary high-pressure system over the Tasman Sea, led to the intensification of storms as they moved into the humid air over the eastern coast. The combination of these weather conditions resulted in extensive damage and led to 10 fatalities, with most deaths attributed to drowning or accidents related to falling trees.
For reinsurance purposes, the definition of a storm event can vary, often encompassing a set period for loss aggregation, commonly 168 hours. PERILS adopts this standard approach, thus treating the losses from the Christmas Storms as a singular insurance event during the specified timeframe.
PERILS Asia-Pacific head Darryl Pidcock said that despite the significant impact of the 2023 Christmas Storms, such events are not unprecedented in Australia’s history of natural catastrophes.
“Australia experienced a relatively benign 2023 compared to more recent years from a natural catastrophe perspective,” he said. “The 2023 Christmas Storms were the largest cat loss for the Australian insurance industry for the calendar year.
“However, for Australia, this event is not unusual when compared to the South-East Queensland Hailstorms (‘Halloween Storm’) of October 2020 (AU$1,222 million at the time) or the January 2020 Hailstorms (AU$1,887 million at the time).
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