Re/insurance industry losses from the catastrophic bushfires still burning through southeastern Australia continue to increase, with the Insurance Council of Australia (ICA) now estimating total insured losses at US $645 million (AU $939 million).
The new figure represents a jump of 33% compared with the ICA’s previous loss estimate on January 7th.
Losses are based on the 10,550 claims received by insurers from the bushfires in New South Wales (NSW), Victoria, South Australia and Queensland.
The fires, which began back in November 2019, have destroyed more than 25.5 million acres (10.3 million hectares) nationally, and caused the deaths of at least 23 people.
The ecological impact is also staggering, with an estimated 1 billion animals killed and huge swathes of habitat levelled.
Around 100 bushfires continue to burn in NSW alone, where more than 1,000 homes are thought to have been destroyed since the new year.
In parts of both NSW and Victoria, authorities are urging people to leave their homes “to avoid tragedy.”
And now, at the border between the two states, there are fears that two large fires could combine, spurred on by forecasts of heat, strong winds, and dry lightning.
The ICA warns that insurers are expecting many more claims to come in over the coming days and weeks, and as a result, it’s expected that total insurance and reinsurance industry loses from the bushfires will continue to soar.
Suncorp announced yesterday that it has received more than 2,600 bushfire-related claims since September 2019 with a total estimated cost of up to AUD 345 million (USD 237 million), and has noted that losses from the event could trigger its reinsurance protection.
And IAG similarly said last week that it had capped tapped its 2019 reinsurance program to recover losses from the ongoing bushfires in Australia, a sign that the bushfires would lead to a reinsurance market hit.
With reported losses continuing to increase significantly every day, there is also potential for the reinsurance market to be hit more significant than expected.
Since September 5, 2019, combined bushfire catastrophe losses in Australia now stand at $995 million from a total of 11,272 claims, according to the ICA.
The Council declared two earlier bushfire catastrophes in late 2019 for Rappville NSW (October 10, $19 million, 225 claims) and northern NSW/southern Queensland (September 5, $37 million, 497 claims).
Analysts at Moody’s have warned that the bushfires are likely to dent re/insurers’ profits, but added that the strong fundamentals of the region’s property and casualty (P&C) insurers mean that losses should be manageable.