S&P Global Ratings has warned that severe flooding in New South Wales (NSW) and Queensland will lead to an influx of property & casualty (P&C) insurance claims. However, it will not impact insurers' credit quality.
Now that the bushfire season in Australia is over, insurers have to deal with storms and flooding – with NSW being the latest region to suffer from this extreme weather event.
S&P Global Ratings stated that ultimate losses for each insurer will depend on their exposure to the hardest-hit areas, the declared number of events, and the structure of their reinsurance arrangements.
“The full extent of the damage caused by the floods across large parts of New South Wales, and to a lesser extent Queensland, is yet to be determined with the rain forecast to continue for several days. We expect it will take weeks for many claims to be lodged,” S&P Global said in a statement sent to Insurance Business.
Nevertheless, S&P Global Ratings expects that P&C insurers in Australia are prepared to assess and meet claims that arise, with reinsurance protection shielding the larger insurers from oversized losses.
“The three largest primary insurers have relatively low retentions, in the AU$150 million to AU$250 million range, before catastrophe reinsurance kicks in,” it said.
