PERILS, an independent organisation providing industry-wide catastrophe insurance data, has released a detailed industry loss footprint for the New South Wales (NSW) and Queensland (QLD) floods that occurred from March 18 to 24 this year.
In March, the East Coast of Australia faced intense rainfall that resulted in severe river and surface water flooding. The rainfall resulted from the blocking of a high-pressure system in the Tasman Sea and a low-pressure system off north-west Australia, which fed large volumes of moist tropical air into eastern Australia.
Based on detailed loss data that PERILS collected from the majority of the Australian insurance market, the updated insurance industry loss for the NSW and QLD floods totalled AU$751 million – this compared to the AU$1,055 million issued by PERILS in its first loss report six weeks after the event and AU$916 million issued three months after the event.
The latest figure primarily comprises personal lines property loss representing 69% of the total industry loss. Meanwhile, commercial lines property losses represented 19% and motor losses 12%.
According to PERILS, the significant decrease was driven entirely by the collected loss data and indicates initial over-reserving of losses in the wake of the event.
Darryl Pidcock, the head of PERILS Asia-Pacific, commented: “This is the first time we have observed two consecutive decreases in industry loss numbers for a PERILS-captured event. This clearly evidences the difficulties associated with setting adequate loss reserves for this kind of event, which represented a mixture of storm drain and river flood losses.”
Pidcock described all catastrophe events as highly complex. However, the complexities associated with flood events, including those in NSW and QLD in March, are particularly problematic.
“By providing our detailed industry loss footprints for Australian catastrophe events, our aim is to help the insurance industry better understand and model the increasingly challenging catastrophe risk landscape. Achieving this requires a joint effort, and we thank our data-providing insurance partners for their continued cooperation,” he added.
PERILS will release an updated estimate of the insurance industry loss from the NSW and QLD floods on March 24, 2022, a year after the event’s occurrence.
