Australia has been flooding again in the last week, as storms and torrential rain hit parts of the south east of the country and this episode has now been designated an insurance catastrophe, while rating agency S&P said so far the claims from it shouldn’t trouble reinsurance capital.
Australia’s southeastern region was inundated with heavy rain last week, as our sister site Reinsurance News reported at the time, which drove evacuations across three states after rivers across New South Wales and Victoria, as well as the island state of Tasmania, began to flood.
Now, the Insurance Council of Australia (ICA) has declared the flooding incident an insurance catastrophe, recognising the growing severity of another flood event in the country.
The ICA also noted that more extreme weather is forecast that could exacerbate this flooding further.
This morning the ICA said, “Floodwaters are expected to peak across three river systems in Victoria today: the Murray, the Goulburn and Campaspe, putting thousands of homes and businesses at risk. According to forecasters, areas in northern Tasmania and in western New South Wales are also at risk of further flooding in the coming days.”
By today, insurers had received 6,350 claims relating to the floods across Victoria, New South Wales and Tasmania, the ICA explained.
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.”
In a report issued on October 17th, rating agency S&P said that, “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.”
With additional extreme weather and flooding forecast, it remains too early to make that assessment at this stage and reinsurance capital providers will certainly be watching this latest weather event in Australia unfold.
At the time of S&P’s report, the new flooding was only deemed a significant event by the ICA, with the catastrophe declaration only coming today.
Coming after the flooding from earlier this year, which is now estimated to have caused insurance and reinsurance market losses of AU $6.3 billion by PERILS, the industry, both locally and the global reinsurers, will be hoping for a less impactful summer ahead in Australia, but this flood event does not bode well for the chance of severe storm outbreaks over the coming months.