Yasi Loss Estimates Continue to Mount

February 13, 2011

1-Yasi-WikiA new estimate released by modelling agency EQECAT Inc. said insured losses from Tropical Cyclone Yasi, which mauled Queensland earlier this month, could reach $547.7 million — while rival catastrophe modeller AIR Worldwide Corp. now says insured losses from the Australian storm could be as high as $1.52 billion.

Australia’s largest insurer, Sydney-based QBE Insurance Group Ltd., said its “very preliminary estimate” of losses from the cyclone was $100 million. Sydney-based Insurance Australia Group Ltd. said under its reinsurance programme –much of which cascades through Bermuda’s catastrophe market — its losses from Yasi would be capped at  $126.8 million, but also said it was too early to tell if cyclone claims would reach this level. Brisbane-based Suncorp Group Ltd. said it expected its net cyclone claims to be capped at $10.1 million.

Australia’s insurers and Bermuda reinsurers already were counting the cost of severe flooding in the states of Queensland and Victoria in December and January when Yasi hit earlier this month. Leading indusry analysts predict Bermuda reinsurers will see their earnings for both 2010 and 2011 significantly impacted by the recent Australian disasters — already declared to be the costliest in that country’s history.

Australia’s leading insurers last week provided further details of their reinsurance programmes to protect against catastrophe claims. QBE said expected claims from the this year’s flooding would fall within the allowances for large risk and catastrophe claims. For worldwide catastrophes, QBE said it had a single layer of reinsurance coverage of $1.3 billion in excess of a $200 million retention and total coverage of $2.6 billion for 2011.

QBE said it had purchased additional high-level reinsurance catastrophe coverages for Australia and New Zealand and that its captive reinsurer, Bermuda-based Equator Reinsurances Ltd., had purchased catastrophe protection of $100 million in excess of $100 million.

IAG said it had in place a catastrophe reinsurance program that covers losses from $253.6 million up to $4.16 billion. It said it had a three-year agreement that reduced its maximum event retention for a first event to $152.1 million, and additional coverage that reduced the maximum event retention to $126.8 million for a second event and $50.7 million for a third event.

The insurer also said it had a aggregate cover of $150 million, in excess of $150 million, that would provide protection from accumulated losses from events greater than $15.2 million.

Meanwhile, bushfires raging across vast areas of western Australia were declared “an insurance catastrophe” by the Insurance Council of Australia last week, but no loss estimates were released.

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