The Insurance Australia Group (IAG) now expects to fully use up its FY17-specific reinsurance cover of $96 million – which is set to kick in if claims rise above the $680 million mark- after Cyclone Debbie raised the insurer’s FY17 net natural peril claim cost estimations to $850 million.
The IAG set estimated Cyclone Debbie costs at $140 million – making up a significant chunk of the Insurance Council of Australia’s total estimates of AU$410 million from 35,370 claims filed so far (as of 9am local time April 6th).
The IAG reported receiving about 4,300 claims, mainly for property damage, after the severe Category 4 cyclone struck the Queensland coast last week.
Cyclone Debbie brought high winds and heavy downpours that caused the worst floods the region had seen in 50 years.
Peter Harmer, IAG Managing Director and CEO, said the company is “well-advanced” in assessing damage and had moved quickly to make initial repairs; “This is a highly unusual and complex event with the devastating effects still being felt across North and South East Queensland, Northern New South Wales and New Zealand.
“We have mobilised local builders to perform critical repairs where we have access, and we have our people at the recovery centres in the affected areas.
“We are well-advanced in assessing damaged properties and this is a priority so our customers can get back on their feet as soon as possible.”
From June last year to February 2017, the firm’s net natural perils claims costs had risen to $650 million, and now with the added financial impact from Cyclone Debbie, the AIG is looking at higher than expected losses for the FY17, of course, any further severe weather events in the following three months before the 2017 fiscal year close would further add to this toll.
But the insurer’s said it’s largely protected against further losses, with maximum exposure to any future events limited at $20 million due to activation of the calendar 2017 aggregate sideways cover which, after Tropical Cyclone Debbie, contains approximately $320 million of remaining protection, with qualifying events capped at a maximum contribution of $180 million excess of $20 million per event.