Insurance Australia Group (IAG) has received over 13,000 claims, predominantly motor, after the severe February 18th Northern Sydney hailstorm; the costs of these rising claims could place the insurer’s already strained 2017 fiscal year budget under further pressure, making a fall-back on reinsurance cover increasingly likely as the year rolls on.
With the help of drones capturing aerial footage of roof damage in Sydney, IAG has been working to fast-track the claims assessment process, which, IAG said, has been further accelerated as nearly half of NRMA customers lodge claims online.
The Group expects the net cost from the hailstorm and other perils in FY17 to fall within its current perils allowance and available reinsurance cover, although it says it’s too early to place a price cap on total losses.
The insurer has already suffered heavy losses in the first half of the fiscal year, that have heavily depleted its allowance coffer.
IAG today released figures for insured losses in 1H17, reporting net natural peril claim costs of AU$420 million, exceeding their allowance for the first half of their fiscal year by AU$80 million.
The Kaikoura earthquake alone accounted for over a quarter of insured losses in 1H17, at AU$117 million.
While attritional losses made up AU$156 million, and Adelaide and New Zealand storms losses amounted to a significant AU$86 million.
IAG’s post quota share reinsurance cover consists of a calendar 2017 main catastrophe programme, which limits a first event exposure to AU$200 million; a calendar 2017 aggregate cover which provides AU$380 million of protection excess of AU$260 million, with qualifying events capped at AU$180 million excess of AU$20 million per event; and an FY17 specific cover which provides AU$96 million of protection directly above the AU$680 million perils allowance.
IAG’s total natural perils allowance for the 2017 fiscal is AU$680 million, so with two-thirds of this figure already eaten up in the first half of the fiscal year, if the insurer falls prey to further heavy loss events, it could soon see its budget depleted and have to fall back onto its reinsurance safety net.
“Our immediate focus is to help customers affected by the storms as soon as possible, and additional employees have been allocated to the claims and repair management teams,” said Cheryl Chantry, IAG’s Executive General Manager, Short Tail Claims.
