by Mina Martin 14 Feb 2020
Some policyholders are reporting insurance
premium increases of almost 50% after a long summer of bushfires, storms, and
floods; but the Insurance Council and analysts are playing down the prospect of
widespread large premium increases.
Six catastrophic events have been declared in
Australia over the past five months, including the unprecedented bushfire
crisis that started in September, with insurance claims expected to total more
than $2.5 billion.
“This is known as disaster season for a very
good reason and this certainly has been one of those angry summers that
Australia experiences,” ICA’s Campbell Fuller said, adding that it was
too early to say if insurance premiums would be impacted by the summer
catastrophes and that it was “unlikely these… will have a significant effect on
premiums,” ABC reported.
Fuller said insurers has already taken into
account the impending natural catastrophe costs last year – a sentiment shared
by JP Morgan insurance analyst Siddharth Parameswaran.
“There were plenty of signs in early 2019 that
we were heading into a catastrophic bushfire season and the insurers made the
relevant prudential precautions for that, including reinsurance and their own
balance sheet measures,” Fuller told ABC.
“The industry had already allowed for a huge
increase in their natural perils budgets leading into this,” Parameswaran said.
“I think there will be some [premium] increases in particular parts of
Australia, but we’re not expecting large, across-the-board increases like we
saw in 2011 [after Cyclone Yasi].”
The JP Morgan analyst warned though that the
natural disaster season was not over.
“There’s no doubt this year is materially above
average in terms of what we would have expected and we’re still not through the
worst of it, so there are still some pressures to come,” Paramewaran told ABC,
as he estimated about $2 billion insurance losses from the bushfires, plus
almost $1 billion for wet weather events such as hail, cyclones, and floods.
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