ICA Puts Australian Bushfire Losses at A$1.34B, Expects Sharp Increase in Claims

The Insurance Council of Australia (ICA) has revealed that insurers have now received 13,750 bushfire catastrophe-related claims since November 8th, with industry losses estimated at AUD 1.34 billion (approximately USD 925 million).

Source: Reinsurance News | Published on January 14, 2020

Insured losses from wildfires

The ICA has warned that it is anticipating a further “sharp increase” in claims this week after commercial claims come in and household property assessments are completed.

On January 10th, the ICA said that the ongoing bushfires burning through southeastern Australia had resulted in 10,550 claims received by insurers and re/insurance industry losses of AUD 939 million (USD 645 million), noting at the time that it was expecting additional claims to filter through.

The latest figure from the ICA represents an increase of just under 43%, and with the figure expected to rise further, it could become the most costly ever recorded for bushfire losses in Australia for insurers.

At the same time, the higher the ultimate loss trends then the higher any hit to reinsurance capital will be. A number of insurers in the region have already discussed the impacts of the bushfires, with IAG revealing that it had tapped its 2019 reinsurance program to recover losses from the bushfires.

Large insurer Suncorp then announced that it had received more than 2,600 bushfire-related claims since September 2019 with a total estimated cost of up to AUD 345 million (USD 237 million), warning that losses from the event could trigger its reinsurance protection.

Until the ultimate loss is understood it remains uncertain just how much of the losses from the bushfires will be assumed by the reinsurance market. However, with the ICA expecting a sharp increase in claims and therefore losses in the coming days, it looks more likely at this stage that a greater level of reinsurance capital will be hit than before.