Shares in Brisbane-based insurer and regional banker Suncorp did an about-face during trading yesterday after it provided an update to the cost of this summer’s natural disasters, especially the floods and storms in southeast Queensland, northern NSW and around Sydney.
The shares were easier after the company boosted the total estimated cost (so far0 from all the various events since July 1 last year by $25 million to a huge $1.1 billion.
That saw the shares hit an intraday low of $10.94 before investors re-read the statement and found that most of the cost was covered by various forms of re-insurance and that the rise was small given the already high value of the damage (so far).
Suncorp shares then recovered to end the day up 0.8% at $11.12.
Suncorp said in its Wednesday statement that as of Monday it had received more than 34,000 claims related to the flood damage, with at least 80% involving homes. Approximately 60% of claims stem from Queensland with the other 40% in New South Wales
Suncorp estimated that its net retained loss from the combined events is currently around $75 million.
It reported that recoveries are being triggered under a combination of the company’s various reinsurance cover policies. Suncorp said it “remains well protected for the remainder of the year” under existing reinsurance cover.
Suncorp increased its estimate of natural hazard costs for the full year by $25 million to $1.1 billion and CEO Steve Johnston said in the statement:
“It’s some of the most widespread devastation I have witnessed, and it is a tragedy for so many Australians.”
“The floods came after a six-month period where we had already received more than 50,000 natural hazard claims, so we are currently recruiting more people to help us move as quickly as we can to support our customers,” Mr Johnston added.
So far the Insurance Council of Australia has estimated that the cost of the floods alone in both states is more than $2.1 billion and still rising. Up to last night the ICA’s members had received 140,754 claims which was up nearly 4% in 24 hours.
These early estimates will prove to be conservative, especially where building work, renovations and complete knockdown and rebuilds are concerned. There are thousands of homes that have already been declared write offs, especially in and around Lismore in northern NSW.
Insurers and their customers will face the usual litany of claims cost inflation from higher prices for building materials and cost of labour (we have already seen that with the burst of inflation in the past year).
There will be delays because of slow government and company processing and a lot of heartache and agony which can’t be valued in anyway.
Suncorp’s $1.1 million estimate not only refers to the recent rainstorms and flooding, but also earlier storms in some states such as Tasmania, Victoria, WA and South Australia, the Victorian earthquake in late 2021 and fires in WA.
