The Insurance Council of Australia has declared an insurance catastrophe after more than 5,000 claims were lodged over the weekend following extreme rain and flooding across Sydney and much of the central and northern NSW coast.
The ICA said insurers will continue to monitor the situation in south-east Queensland to determine if a Catastrophe Declaration is required for that area.
More claims are expected this week, with an update tomorrow.
Shares in major listed insurers IAG (down 2.4%), Suncorp (down 2%), and QBE (down 2.9%) all lost ground yesterday on the ASX.
More than 2,100 claims had been lodged with IAG as at Sunday night, covering mainly property damage.
IAG said it was too early to accurately determine the net cost of the flooding and storms.
Around 18,000 people had been evacuated in NSW because of the floods up to yesterday. Many people in parts of the north coast have returned home to find devastation, especially among small businesses.
Evacuations were happening in the Parramatta – Wetherill park area of mid-western Sydney while people on the south coast of NSW were warned to expect heavy rain and rapid rises in river and stream levels on Monday night.
The insurance costs are likely to be less than many people might think given the scale of the floods and the obvious scenes of damage because many businesses and home owners do not hold flood cover because of the huge expense.
Suncorp Group also said it was too early to estimate the costs from the worst flooding Sydney has faced in 60 years and has received 1,300 claims so far.
It expects the number of claims to rise in the coming days. For 2020-21, Suncorp said it had set aside $A950 million as its natural hazard allowance. So far it has paid out $643 million of that figure, with the remainder to cover flood and storm related costs by June 30.
Shares in the company were down 2.7 per cent at $4.73 after an hour of trade on the ASX this morning. QBE Insurance dropped 2.2 per cent to $9.57, and Suncorp was 2.1 per cent down at $9.92.
According to analysts, IAG has room for $368 million worth of claims in the current six months, after paying out $290 million in natural perils costs in the July to December 2020 period.
Suncorp chief executive Steve Johnston said customer support teams will be deployed to the most impacted regions when waters recede, “and our affected bank customers can access our emergency relief package”.
The relief package includes the ability to defer scheduled loan repayments (including interest only) on a case-by-case basis, working capital assistance and credit card relief options.
The ICA’s catastrophe declaration will speed up the insurance industry’s response for affected policyholders, delivering direct assistance to the worst-affected.
“As many areas are currently inaccessible due to floodwater, insurers are expecting further claims in coming days as emergency services allow residents to return to their properties to examine the extent of their damage and losses,” ICA chief executive Andrew Hall said in Monday’s statement.
