By Favour Nnabugwu
INSURANCE and reinsurance losses due to the estimated claims totals reported for tropical cyclone Debbie have risen across Queensland and New South Wales, Australia, hitting US$1.3billion from 68,000 claims.
Tropical Cyclone Debbie made landfall on March 28, 2017 as a category four hurricane; making it the strongest cyclone to hit the Australian region since 2015. The eye of the storm came ashore near Airlie Beach on the north Queensland coast, with estimated 10-minute sustained winds of close to 200km/h.
“This destructive cyclone caused structural damage by flooding, storm surge and wind in regions close to the Queensland coast,” according to Swiss Re’s Group Chief Underwriting Officer, Mr Matthias Weber.
“We are a lead reinsurer in this market and estimate that Cyclone Debbie has caused higher commercial and corporate losses compared to similar events in the past. We express our sympathies to those affected and will continue to work closely with our partners and clients to ensure that people receive the financial support they need to clean up and rebuild after this tragic event.”
The high losses were a result of the densely populated, commercially active area the storm hit, a spokeswoman said, with hundreds of residential and commercial buildings floodedand thousands of residents and businesses evacuated from the region. Reinsurers act as financial backstops for insurance companies and help them pay for large claims from hurricanes or earthquakes in exchange for part of the premiums.
The disaster zone stretched 1,000 km (600 miles) from Queensland state’s tropical resort islands and Gold Coast tourist strip to the farmlands of New South Wales state.
Five miners in the cyclone-hit region, including BHP Billiton and Glencore, have declared force majeure a clause typically invoked after natural disasters since multiple landslides and flooding knocked out major coal rail networks.
Despite hindering profits, higher catastrophe costs can ease pressure on pricing in the reinsurance markets.
The expensive cyclone may lead to a rise in Australian property & casualty reinsurance pricing in the next July or January contract renewals rounds, a spokeswoman said. However, the event did not impact business written in April, which is largely concentrated in Asia.
Shares in Swiss Re fell 0.9 percent by mid-morning, lagging Europe’s overall insurance index, which was down 0.5 percent.
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