RACQ expects reinsurance trigger from N Qld flooding, estimates damage bill of up to $50m

Losses from North Queensland flooding are so widespread that a major insurer is being forced to tap into its own insurance protection, with its damage bill potentially reaching $50 million.

LOSSES from North Queensland flooding are so widespread that insurer RACQ is tapping its own insurance protection, with its damage bill potentially reaching $50 million.

It’s the latest example of how the flooding is not only wreaking havoc on people’s households, but also bleeding companies’ bottom lines.

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Brisbane-based RACQ, which includes a bank and roadside-assistance divisions, estimates the final damage bill from its customers could range between $30 million and $50 million.

But the net cost for RACQ, after it uses reinsurance — insurance for insurers in disasters — would be $20 million. That would still chew into profits with RACQ’s insurance arm making raw “underwriting earnings” of $87 million last year.

RACQ so far has about 2160 claims — almost 1300 were for house insurance. RACQ’s insurance chief John Myler said despite the losses, “we plan for this, so one-off events like Townsville do not directly impact customer premiums in localised areas”.

Other industries have also been hit: Cattle producer AACo, for example, warned on Monday that four of its 21 properties were heavily flooded, with some areas bracing for “extreme” herd losses.

The insurance sector’s bill is rising with the Insurance Council of Australia saying 14,600 claims had been lodged as of Tuesday morning, worth an estimated $175 million.

Sydney-based insurer Allianz had recorded 480 claims worth an estimated $5.7 million. “About half the claims are for motor vehicles and the other half are property claims, mainly for building and, or contents,” an Allianz spokesman said. Sydney-based IAG, behind the NRMA and CGU brands, had 1700 claims, the majority flood and storm damage.

Sunshine Coast-based Youi had received more than 600 claims valued at over $5 million, and said it was too early to determine if the flooding will trigger its own reinsurance protection.

Businesses affected by flooding along Charters Towers Road in Townsville. Picture: Evan Morgan

Youi said it covered flood products. While mould — an issue in the clean-up — by itself was not usually covered as a stand-alone event, Youi said “in these extenuating circumstances” customers should lodge a claim as quickly as possible for assessment.

A big insurer in North Queensland is Brisbane-based Suncorp, which was not releasing claims details on Tuesday because its profit results are due on Thursday.

Based on earlier corporate filings, Suncorp’s maximum exposure in this disaster would be $89 million before reinsurance protection kicked in.

The treatment of customers will be in the public eye after insurers copped criticism in the final report from the royal commission into financial services this month.

Commissioner Kenneth Hayne criticised Suncorp’s dragged-out handling of repairs of a customer’s home, damaged in 2015 Hunter Valley storms, as “insufficiently compassionate … and insufficiently diligent”. He also said Youi’s response to a claim for another client’s home after Cyclone Debbie in 2017 was not professional or compassionate.