Australian insurer Suncorp has received approximately 3,750 claims so far from the recent severe weather affecting regions across metropolitan and regional Victoria, with more expected over the coming days and weeks.
Earlier this week, the Insurance Council of Australia (ICA) declared a catastrophe event in Victoria after thousands of homes and businesses were left without power.
Suncorp said that most of the claims it has recorded are for property damage caused by heavy rain, severe winds and flash flooding.
“Victorians have already been through a lot, and we are moving as quickly and as safely as we can to help our customers and communities affected by this severe weather,” said Suncorp Group CEO Steve Johnston.
“Our customer support teams are on the ground in Traralgon providing face-to-face support to all our affected customers including AAMI, Apia and GIO, and we have scaled up our flexible claims team to manage the increase in claims and calls from customers.
Suncorp’s total natural hazard costs across Australia and New Zealand year to date to 31 May 2021 were $955 million, approximately $40 million above the year to date allowance of $915 million.
The group’s full year natural hazard allowance is $950 million, meaning that, accounting for its reinsurance program and remaining covers, the maximum potential loss from this event is $50 million.
“What we’re seeing in Victoria should again act as a reminder to the devastation which can be caused by severe weather events,” Johnston continued.
“More needs to be done to better protect homes in flood-prone regions across the country, including improved town planning and government investment in mitigation infrastructure.”
Based on Suncorp’s claims from the Victoria flooding, analysts at Goldman Sachs believe that the company will likely make a recovery on drop down covers before the aggregate cover, suggesting the majority of the $400 million aggregate cover will remain post this event.
This is based on the assumption that the original New South Wales flood cost estimate remains in the $230 million to $250 million region, and that the Victoria event will fully erode the remaining $40 million of Suncorp’s deductible for its aggregate cover.
However, looking ahead, Goldman Sachs expects that Suncorp will remain well protect, noting that further earnings risk will largely be a function of insurer retaining the first $5 million of each event once into the aggregate cover.