Insurance claims climb as Queensland gets drenched in wake of Cyclone Debbie

BUSINESSES are starting to make insurance claims for being knocked out of operation by Cyclone Debbie, while homeowners are slowly recording damage.

Damage caused by Cyclone Debbie to shops at Airlie Beach. Pic Dan Peled

BUSINESSES are starting to make insurance claims for being knocked out of operation by Cyclone Debbie while homeowners are slowly recording damage.

About 3500 claims had rolled in after Cyclone Debbie battered North Queensland, the Insurance Council of Australia said on Thursday afternoon. Flooding has now stretched to the state’s southeast, further compounding the damage bill.

“It’s going to be very big,” Andrew Steel, the Townsville-based chief executive of Steel Pacific Insurance Brokers, told The Courier-Mail.

So far his organisation has taken almost 100 claims from Mackay to Proserpine.

“The claims are starting to come in,” he said. But Mr Steel added a lot of people were still getting over the disaster or could not reach smashed zones yet, so calls would likely ramp up heavily on Friday and Monday.

Commercial claims can be costly for insurers. Among business claims Mr Steel had seen so far included one for looting and another called business-interruption insurance for a food manufacturer.

This insurance covers events such as when a business cannot operate, possibly with electricity being lost, which Mr Steel said had impacted some clients. He also expected claims would come from farmers, tourism operators and owners of smashed ships.

Suncorp, a major insurer up north, had so far received 1200 claims, while rival RACQ had 397 and Youi 372, almost all for home and contents damage. Allianz had 40 on Thursday morning.

IAG had around 300 claims, mostly for property from its CGU and NRMA brands.

“Our builders haven’t been able to assess the affected areas due to limited access … but (we) expect claims to come through for structural damage, food spoilage and falling trees, over time,” an IAG spokeswoman said.

A big enough damage bill will trigger an insurer’s own insurance, called reinsurance. That reinsurance cover would seem to extend from Debbie’s initial battering to floods swamping the State’s southeast on Thursday.

One issue is the length of time that reinsurance covers any one event. It differs according to company, with some industry sources saying it can cover damage over a seven-day period.

The start-time for reinsurance differs too; some insurance sources said it was from when first damage was recorded — which might be Hamilton Island being struck earlier this week — when the ICA declares an event a “catastrophe”, which happened on Tuesday afternoon, or even when a cyclone forms, with one counting it from Sunday. Insurers can also discuss that start-time with reinsurers if disasters stretch longer than the designated time period.

Other financial institutions are also offering relief, with Bank of Queensland among lenders releasing a hardship package that potentially includes freezing loan repayments and interest for up to three months.

While it was too early to understand the scope of Cyclone Debbie’s fallout, BoQ chief financial officer Anthony Rose said typically bad-loan losses for banks from natural disasters was limited.

“What can often happen is the repair and maintenance activity that is required to correct everything does actually create a local economic boost to those regions. And we’ve seen that reasonably consistently … when there have been these type of disasters, whether they’ve been earthquakes or cyclones or floods,” he said.

BoQ initially in 2011 had established an overall $45 million earnings buffer in anticipation of fallout from Cyclone Yasi, flooding and tough economic conditions.

But BoQ chief executive Jon Sutton said that the bank did not see a significant change in customers in arrears. The economic impact would fall on industries such as agriculture and tourism, he predicted.

“My understanding from the people on the ground, up there, (is) this one has been just as bad, if not worse, than Yasi,” Mr Sutton said.