The cost of the flooding in NSW and southeastern Queensland last month has risen past half a billion dollars as insurance companies receive more claims from policyholders.
The Insurance Council of Australia on Wednesday raised the number of claims received so far to 33,152 with an estimated cost of $497 million.
As initial damage cost estimates and insurance charges are always the lowest, this figure will continue to rise while more and larger claims come in from people who return home to find more damage than thought.
As well, there will be a big cost to government – especially local councils – but that is covered by government grants and assistance.
It is likely the eventual cost will end up around $1 billion – especially with building supplies and trades people in short (and costly) supply from the home renovation and building boom (as we saw yesterday with a 21.6% surge in total building approvals in February).
Suncorp said on Wednesday it had received slightly more than 7,600 claims across the three states, with NSW the hardest hit.
Suncorp with its AAMI, GIO, Bingle and Apia, estimated claims costs from the floods at between $230 million and $250 million.
It said its claim costs from the event would be capped at $250 million thanks to its reinsurance arrangements which is used to limit insurance companies’ exposure to large disaster.
Insurance Australia Group, the country’s biggest general insurer last week estimated it would face $135 million in claims from the event, and that it was likely to exceed its budget for natural peril claim costs for the financial year.
IAG though has more claims to announce – it had received 8,000 claims by 4pm on march 25, so it is due for another update – possibly Thursday. That figure was already larger than Suncorp’s total as of Tuesday, for just under half the cost which doesn’t sound right.
In Wednesday’s statement Suncorp CEO Steve Johnston urged governments to improve their planning decisions and avoid building new homes in highly flood-prone areas.
“Suncorp continues to work with our customers, particularly in the hardest-hit areas of the Mid-North Coast of NSW and Western Sydney,” Mr Johnston said.
“Floods too frequently devastate communities across Australia, which is why as a country we must address this risk. Unfortunately, many homes in Richmond, Windsor, Penrith, Port Macquarie and Taree are in medium to very high flood-risk areas.
“As a country, we need to address how we can protect homes in flood-prone regions through government investment in mitigation infrastructure. We must also improve planning decisions to ensure we are not building new homes in high-risk areas,” Mr Johnston said.
We have yet to hear any claims figures from QBE and the unlisted Allianz which is a top four general insurer in Australia, or some of the smaller groups.
Suncorp shares rose 1.5% to $9.90 and IAG shares were up 1% at $4.68.
