'Unprecedented times': floods ranked as Australia's costliest ever disaster
Perils has upped its insured loss estimate for this year’s flooding in Queensland and NSW to $6.3 billion, making it a record catastrophe loss for the Australian insurance industry.
The Zurich-based data firm’s last estimate in June was $4.9 billion in insured losses from the disaster.
“This event is now the largest insured catastrophe loss event experienced in Australia,” Perils Asia-Pacific Head Darryl Pidcock said.
“These are unprecedented times for our insurance partners. It remains a very difficult time for policyholders recovering from the flood impacts as well as the insurance industry managing the sheer volume of claims.”
The February 20 to March 11 floods saw Brisbane receive 80% of its annual rainfall in just a few days, rivers burst their banks and hundreds evacuated in Lismore in northern NSW. The floods caused chaos in Sydney, and 22 died.
The Insurance Council of Australia (ICA) expects an update on its loss estimate at the end of the month, a spokesperson told insuranceNEWS.com.au.
The ICA’s latest available estimate is $5.28 billion from 233,000 claims, with 44.1% closed. The ICA previously said that the average claim is $22,000, with personal claims averaging $17,000 and commercial claims $71,000, and both the number and value of claims is evenly split between the two states.
For more than two decades, the 1999 Sydney hailstorm has held the title of most expensive Australian catastrophe. It came with a $5.57 billion insured-loss bill in normalised terms.
The only other Australian catastrophe to surpass $5 billion in insured losses was 1974’s Cyclone Tracy, which cost the industry $5.04 billion when it hit Darwin on Christmas Day, demolishing or badly damaging 90% of homes and killing 65.
Perils says personal lines property losses make up 62% of the total industry loss, while commercial property losses represent 28% and motor losses 10%. The insurance industry faces many challenges, it says, including completing claims assessments and shortages in building labour and supply disruptions driving up claims costs.
The ICA’s annual Insurance Catastrophe Resilience Report say says the February ‘rain bomb’ first struck Maryborough in Queensland and slowly travelled south to Sydney, impacting more than 70 local government areas. ICA declared a catastrophe for Queensland on February 26, and two days later extended the declaration to NSW.
The two states were continually battered by rain throughout the next few months, including another flood in the Hawkesbury-Nepean catchment in early July – the worst faced by the regularly-flooded region in 47 years, with residents facing life-threatening conditions and 50,000 placed under evacuation orders.
“Perhaps the sheer scale of this year’s catastrophe season could be summed up by the cost – a huge $3.9 billion difference in the cost of insured damaged from one year to the next. With the likelihood of another La Nina season upon us, insurers are gearing for another wet and wild catastrophe season ahead,” the ICA report said.
The Perils estimate comes a day after the Bureau of Meteorology said Australia has entered a La Nina weather event – the third in a row after the last one ended in June – increasing the likelihood of floods this spring and summer.
