Insurers face rising tide of cyclone claims despite a better-than-expected aftermath

Australian insurers are likely to dodge mammoth costs from Cyclone Alfred and analysts believe IAG is better placed than rival Suncorp to weather the financial storm.

Nataliya Bolsunovska of the Brisbane suburb of Carina takes a break from cleaning flood damage in the wake of ex Tropical Cyclone Alfred. Picture Lachie Millard

Australia’s insurers are expected to avoid the mammoth costs of Cyclone Alfred, with analysts saying heavyweight Insurance Australia Group was better placed over rival Suncorp to weather the storm.

The Insurance Council of Australia said insurers had received 34,000 claims across the cyclone-affected areas of northern NSW and southeast Queensland, a 50 per cent jump from Tuesday’s figures.

The ICA said insurers had already paid out $2.4m to 6000 impacted customers.

IAG, operator of brands including NRMA, RACV, CGU, and WFI, reported it had seen almost 4000 claims for damage from customers in the cyclone hit areas as of Wednesday morning.

IAG has almost 250,000 customers across the cyclone-hit areas.

The insurer said much of the claims for damage were for wind and water ingress, as cyclonic winds forced rainwater homes and property.

IAG chief executive Nick Hawkins said the insurer’s crews had been assessing claims and running emergency repairs since Saturday morning.

“We’ve significantly bolstered our claims team and are leveraging our capability to bring on additional claims support from around Australia and New Zealand, to ensure we help customers as quickly as possible,” he said.

IAG is also providing pre-booked accommodation to customers in impacted areas, and that its recovery centre and response vehicles were now operational across three locations in southeast Queensland and northern NSW.

IAG chief executive Nick Hawkins. Picture: Nikki Short

“To further strengthen our response, we’ve increased the size of our internal property assessor team, including additional specialists from our New Zealand business,” Mr Hawkins said.

Suncorp reports about 7800 claims for damage from its customers, with the Queensland-based insurer saying many of its claims fell within the Cyclone Reinsurance Pool coverage period.

The $10bn reinsurance pool allows insurers to offset claims from customers with home and contents, strata or commercial policies worth less than $5m.

The pool covers claims between February 28 and March 10.

Goldman Sachs analyst Julian Braganza said the pool was likely to offer insurers “substantial protection” from cyclonic losses.

But he said the pool provisioned $91m to cover Cyclone Jasper losses against its ultimate $409m insured losses.

“It is still too early to know the full impact of Alfred; however, to put it in context, Jasper cost $409m from around 10,500 ultimate claims,” Mr Braganza said.

A man on his morning walk passes a fishing trawler washed up on Queens Beach at Redcliffe after ex Tropical Cyclone Alfred crossed the coast. Picture Lachie Millard

He said IAG was better placed to avoid the worst of Cyclone Alfred, but NSW claims were likely to rise. The Goldman Sachs analyst pointed to IAG’s forecasts of $740m in perils losses over the second half of the financial year.

This could see a $100m overrun in natural catastrophe losses.

But Mr Braganza said IAG had already revealed this expected result prior to Cyclone Alfred.

Suncorp is also guiding expectations of $855m in perils costs over the remainder of the financial year, almost $75m above its allowances.

Shares in Suncorp closed up 1c higher on Wednesday, to $19.03. while IAG was squeezed by investors, down 3c to $7.60.

Fellow listed commercial insurer QBE was down 0.39 per cent or 8c to $20.57.

Originally published as Insurers face rising tide of cyclone claims despite a better-than-expected aftermath