Battered insurers IAG, Suncorp face more wild weather
Sold-down insurance companies are battening down the hatches for another weekend of wild weather on the east coast.
risk: Insurance companies are at risk of breaching their natural disaster allowances and are battening down the hatches for another weekend of wild weather along the east coast of Australia, as the damages bill from the storms earlier this month soars past $200 million.
The weather warning is likely to have the nation’s two largest insurers nervous, with both Insurance Australia Group and Suncorp grinding very close to their natural perils allowance after factoring in the costs from the severe low that ravaged the east coast.
Suncorp yesterday said it was expecting the damages bill from the early June catastrophe to total between $60m and $80m, in line with IAG’s estimation for the costs of its claims. QBE is yet to update the market on its own damages bill.
The Insurance Council of Australia said yesterday the total insured losses from the storms that hit Queensland, NSW, Victoria and Tasmania had tripled over the past fortnight to $235m, following almost 32,000 claims across the states.
“Since the ICA last updated the catastrophe data, insurers have received very large claims for commercial and marine damage, substantially lifting the overall losses from these storms,” ICA chief executive Rob Whelan said.
Insurers have copped fierce selling over the past two weeks following the storms. IAG shares fell 5.6 per cent, Suncorp slumped 7.6 per cent and QBE was pushed 9.2 per cent lower.
IAG previously said it had received about 10,000 claims, while Suncorp recorded 8000. While Suncorp’s operations are concentrated in Queensland, IAG’s business is focused in NSW, which was more severely affected by the storm. But the insurer’s quota share agreement with Warren Buffett’s Berkshire Hathaway has kept damages in line with its rival.
As the weather bureau is now predicting more storms and heavy rainfall this weekend along the east coast, the Insurance Council is urging policyholders to start preparing now to protect their property.
IAG said last fortnight’s storms put its disaster claims close to the limit of its $600m natural perils allowance for the 2016 financial year, while Suncorp said the impact of the east coast storms left its natural hazards costs “broadly in line” with the annual allowance. Both insurers are recovering from heavy damages last year.
On Tuesday, IAG’s internal meteorology team updated management about the prospect of a low set to hit the east coast this weekend, putting the insurer on the war footing.
Mr Whelan said properties that were damaged in the storms almost two weeks ago may be especially vulnerable to the impact of this coming low.
“If policyholders suffer further damage, they should let their insurer know, which may see their claim further prioritised,” he said.
Deutsche Bank analyst Kieren Chigdey said the industry’s total catastrophe costs were on track to hit about $750m this financial year.
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