The hailstorms that battered the eastern seaboard late last year have created a catastrophic damage bill for one major insurance group.
The Suncorp Groups natural hazard update revealed that the natural hazard cost for the 2019 fiscal year was already between $600–610 million.
This is a blow out of just under $300 million given that the group had only allocated $720 million for natural hazard costs in the 2019 fiscal year.
This large bill was partially caused by the storms that hit Sydney, the Central Coast and South Eastern Queensland that have created a $675 million insurance tab according to the Insurance Council of Australia.
Immediately following the storm, insurers received over 25,000 claims but that number has risen to 81,000 as of yesterday with 60,000 of them for motor vehicle damage and over 17,000 for household damage.
Suncorp alone had 24,800 claims mostly relating to home and motor vehicle damage.
According to Morningstar’s analysis of Suncorp, the storm exceeded the group’s maximum first event retention of $250 million within its reinsurance program.
The analysis by Morningstar claimed that Suncorp had a track record of underestimating natural hazard costs, with the management’s allowance for natural hazards being too low in eight out of the last 10 years.
The allowance for 2019 has remained unchanged at $720 million allowing the group only $115 million in the second half of the fiscal year.
But the group remains protected against a blow-out in the second half with $300 million in cover available once the retained portion of ‘natural hazard events greater than $10 million’ exceeds a total of $504 million according to Morningstar.
The natural hazard woes did impact on Morningstar’s full year fiscal results for Suncorp with a revised cash profit forecast of $1.1 billion down from the original forecast of $1.25 billion.
The research group said the next two financial years would be important for Suncorp as they continue to make strategic and operational model changes.
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