Insurance and reinsurance claims from the bushfires burning through New South Wales and other areas of Australia are continuing to escalate, with more extreme fire danger forecast over the coming days and weeks.
Satellite image showing bushfires burning across Australia on December 31st. Source: Copernicus Sentinel Imagery via AP
Analysts at Aon report that insurance claims from this season’s bushfires have now reached US $207 million, while local news sources have speculated that claims could reach up to AU $600 million (US $419 million).
The Insurance Council of Australia, which previously put claims in the region of US $200 million, has also said that claims are likely to “soar” once property owners begin to return to their homes and farms.
In total, the New South Wales Rural Fire Service currently estimates that 1,298 homes have been destroyed by bushfires in the state this season, with another 442 damaged.
Around 85 facilities have also been destroyed, with another 89 damaged, as well as 2,218 outbuildings destroyed and 937 damaged on farms.
And residents are not expecting any respite soon, as high temperatures and strong winds are forecast for the weekend, which could escalate the fire threat.
Looking further ahead, New South Wales still has at least two months of hot summer weather ahead, meaning the fire danger could be prolonged even further.
This years’ fires have been the largest to hit Australia for decades, burning through vast areas of bushland and wooded areas, as well as damaging homes in the outer suburbs of large cities such as Melbourne and Sydney.
Underwriting sources in Australia estimate that this season has the potential to become the most costly bushfire period on record for the Australian re/insurance market.
In total, more than 5.9 million hectares (14.6 million acres) have been burned, which represents an area larger than the countries of Belgium and Haiti combined.
This includes 3.6 million hectares of land in New South Wales, 1.2 million hectares in Western Australia, 784,000 hectares in Victoria, at least 250,000 hectares in Queensland, and more than 91,000 hectares in South Australia, according local fire authorities.
Persistent heat and drought have undoubtedly been a major cause of the extreme fires this year, but many commentators have also been considering the affect of climate change on the blazes.
On a more positive note, more than 16,000 buildings have been saved from the Australian fires so far, showing that the extent of the damage and the loss to re/insurers could have been much higher without the containment efforts implemented by fire services.
A state of emergency is currently in place in New South Wales, while troops are preparing to evacuate 4,000 people trapped by fires in the neighbouring state of Victoria.
According to the ICA, 72% of the insurance claims it has received have been from New South Wales, with 18% from South Australia, and 5% each from Victoria and Queensland.
