IAG has 17,000 Dec severe weather claims

Australia’s largest general insurance company says the ultimate cost of claims related to last month’s severe weather events is still being determined.

About 17,000 policyholders impacted by December’s severe weather events have lodged insurance claims with Insurance Australia Group, with more than half related to storms around Christmas Day.

Australia’s largest general insurance company said the ultimate cost of the severe weather that hit the east coast was still being determined.

IAG said it had received approximately 17,000 claims from events in December, including about 9000 claims related to severe storms across the east coast around Christmas Day.

About 500 claims resulted from ex-Tropical Cyclone Jasper hitting Far North Queensland communities.

IAG managing director Nick Hawkins said company representatives were on the ground helping customers in areas affected by the “devastating” weather events.

“Our property assessors and partner builders are on the ground in affected areas supporting customers with emergency assessments and make-safe repairs,” Mr Hawkins said on Thursday.

“The safety of communities and our customers is our top priority.”

The claims lodged with IAG, whose brands include the NRMA Insurance, CGU and WFI brands, add to about 19,000 claims lodged with Suncorp since the end of November.

The insurance giant last month said called for a national approach to stop building in disaster zones.

In an update to the ASX on Thursday, IAG said the company’s maximum event retention – an estimate of the largest claim to which an insurer will be exposed – in December was $169m.

“The ultimate cost of December natural peril claims is being determined,” IAG said.

“At this stage, IAG’s natural perils costs are tracking below its natural perils allowance.”

The Insurance Council of Australia on Wednesday extended its insurance catastrophe declaration for the recent storms, rain and flooding to January 3.

The ICA said almost 38,000 insurance claims have been lodged following the severe weather that impacted Queensland, NSW and Victoria since December 23.

ICA chief executive Andrew Hall said the volume and intensity of the storms that impacted three states before Christmas caused substantial damage.

IAG on Thursday also confirmed it had successfully placed its catastrophe reinsurance program for 2024, which included provision for a main catastrophe cover for two events up to $10.5bn, and further drop-down cover of $150m.

Insurers faced significant increases in the reinsurance costs in 2023. Reinsurance is insurance for insurance companies, typically taken out to protect insurers from significant natural peril events impacting their portfolios.

IAG chief financial officer William McDonnell said global reinsurance markets had stabilised.

“Global reinsurance markets have stabilised during 2023, allowing IAG to purchase greater reinsurance protection than we originally expected,“ Mr McDonnell said.

“The cost of the overall program is broadly consistent with our expectation and our guidance of a FY24 (2024 financial year) reported insurance margin of 13.5 per cent to 15.5 per cent.”

The company said that after allowing for all reinsurance protections, IAG had a maximum event retention of $236m as at January 1.