Insurance losses from massive floods in Townsville in northeastern Queensland have reached A$165m ($117m) from 13,560 claims as of 10am yesterday, according to a statement by the Insurance Council of Australia (ICA).
Insurers have already paid more than A$16m in support and emergency accommodation to policyholders hit by the floods that occurred at the end of last month and the beginning of this month. The floods were caused by heavy rainfall.
More claims are expected as residents forced to leave their properties will return gradually to determine the extent of their property loss and damage, says the ICA. Up to 300,000 cattle had been killed in the floods.
Referring to the authorities' decision to release water from the Ross River Dam in Townsville that had reached more than 200% capacity, ICA CEO Rob Whelan said, “The ICA wants to allay community confusion and clarify exactly what this situation means to householders in terms of their insurance cover.
“All insurers in Australia have used a standard definition for flood since 2012. The standard definition includes water escaping from a dam, including an intentional release.
“Insurance policies that include flood cover as part of their home and contents insurance will reference this standard definition. Nationally, the majority of home building and contents policies purchased (about 94%) include flood."
Commercial flood cover has been available for Townsville businesses since 2007 from some insurers.
Separately, S&P Global Ratings says that Australia’s largest insurers are well placed to manage expected claims from major Queensland floods, including the Townsville flooding, which has the potential to result in large claims that may affect up to 20,000 homes.
The agency says both Suncorp and Insurance Australia Group will be able to meet potentially large flood-related losses, thanks to robust reinsurance and capital surplus.
“While the extent of claims from the flooding is unknown, we expect the combination of Suncorp's quota share and natural hazard aggregate reinsurance cover will limit any material impact on earnings,” S&P Global said, as it noted that the Brisbane-based insurance giant still has about A$90m aggregate natural-hazard protection as of 31 December, as well as substantial capital buffer and strong balance sheet.
“IAG is likely to have only modest exposure to the event given it is underweight in the Queensland market and associated flood-cover exposures,” S&P said. “In our view, the scale of the event is unlikely to trigger the first layer of its 2019 catastrophe programme where IAG retains the first A$250m of each event (A$169m post its 32.5% quota-share).”
The Queensland government has ordered a review into the state's flood preparedness and response, including the operation of dams.