ICA Announces Insurance Catastrophe In 3 Australian Flooded States
ICA Announces Insurance Catastrophe In 3 Australian Flooded States
ICA Announces Insurance Catastrophe In 3 Australian Flooded States
Victoria, Tasmania, and New South Wales have been declared to be in an insurance catastrophe by the Insurance Council of Australia (ICA). The effects of the harsh weather and flooding that began last week are being felt by the three states.
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The insurance industry’s response to the catastrophe is prioritized and intensified by the ICA’s Catastrophe statement.
As part of the escalation, insurers are required to provide priority to claims from affected policyholders, prioritize claims so that the most severely damaged property owners receive urgent assistance, and mobilize disaster response specialists to help affected clients with claims.
The ICA said insurers have so far (October 19) received 6,350 claims relating to the floods.
ICA Announces Insurance Catastrophe In 3 Australian Flooded States
ICA’s recent announcement comes only a few days after S&P Global Ratings published a statement where it said it believes this event would not result in reinsurance claims.
S&P Global Ratings said: “Australia-based insurers will be largely able to self-finance claims stemming from ongoing flooding in the southeast of the country. The scale of the event is unlikely to trigger catastrophe reinsurance cover, in our view, even if further rain and flooding are likely over the coming week. We believe the insurers’ earnings will erode only slightly.”
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As the ICA had previously declared the floods affecting the regions a “significant event” – which is of a lower magnitude than a “catastrophe event” -, it believed it would be a modest insurance event, and not widespread relative to past significant climate events, including the February 2022 South East Queensland and New South Wales floods. The latter floods were the worst on record in Australia with total claims incurred of about A$5.45 billion.
The rating agency had said: “Direct fiscal costs to governments and damage to the economy will be manageable, in our view. The states are responsible for most of the immediate relief efforts related to the flooding and will boost grants to local councils to repair infrastructure.
ICA Announces Insurance Catastrophe In 3 Australian Flooded States
“This includes restoring essential public assets, such as roads and bridges. Under Australia’s Disaster Recovery Funding Arrangements, the Australian government will then typically reimburse up to 50%-75% of their costs.”
It added: “Annual federal outlays under this program averaged less than A$2 billion for most of the past decade, which is low compared with the national fiscal deficit. Economic losses should be smaller than for the February 2022 floods, which knocked an estimated half a percentage point off GDP growth in the March 2022 quarter.”
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According to the ICA, the recent decision to escalate the event from “significant” to “catastrophe” reflects the growing severity of the floods and the forecasted further extreme weather.
Floodwaters are expected to peak across three river systems in Victoria later today: the Murray, the Goulburn and Campaspe. The ICA said thousands of homes and businesses are at risk.
ICA Announces Insurance Catastrophe In 3 Australian Flooded States
Andrew Hall, CEO Insurance Council of Australia, commented: “It has been a week since the severe weather hit the south-eastern states of Australia and the severity of that rainfall continues to impact river systems which are now beyond capacity, the ground is soaked and there is nowhere for the flood waters to go.
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“Communities are rallying together to support each other, and insurers stand ready to support them through the oncoming recovery period. Right now, community safety remains a priority, and we strongly encourage anyone in the impacted areas to listen to emergency services, take shelter where it is safe to do so, and not put themselves or others at risk.”
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