Cyclone Threatens Huge New Losses
Analysts fear Tropical Cyclone Yasi — now bearing down on flood-ravaged Queensland — could add another $1.6 billion to the multi-billion dollar bill insurers and their Bermuda reinsurers already face in damage claims in the Australian state.
Losses experienced by Australia’s leading insurers from recent catastrophic floods have already started cascading to Bermuda and London-based catastrophe reinsurers, with Partner Re reporting yesterday [Jan. 31] it will experience losses of between $25 and $35 million as a result of the Queensland disasters.
Three-quarters of the state of Queensland was declared a disaster zone during floods which began in December, killing at least 35 people, forcing the evacuation of thousands of others and causing billions of dollars in property damage.
Powerful Cyclone Yasi is expected to make landfall between Townsville and Cairns tomorrow night or early Thursday with gusts of 155 miles per hour and heavy rains. It’s feared the storm could cause new flash flooding in Queensland as well as devastate crops. Government officials have warned the storm is likely to be more destructive than Cyclone Larry in 2006 which caused $520 million in insured damage.
The biggest likely risk from Yasi is to Australia’s banana industry – centred near Cairns, it produces 85 per cent of the country’s bananas and is worth $400 million at the wholesale level.
A JP Morgan analyst told the “Wall Street Journal” Queensland’s biggest insurer Suncorp would likely sustain net losses of $10m from Yasi. However, payouts from Suncorp’s reinsurers would use up a large part of Suncorp’s reinsurance protection.
The insurer only carried the first $10 million of every separate defined insurance event but claims were mounting and the Queensland floods would have used about $120m of the company’s aggregate $400m reinsurance cover.
Morgan said if Yasi turns out to be a repeat of Larry, that would result in an estimated $275 million of Suncorp’s aggregate reinsurance cover being used up.
.
Oh wow, what next?? That is a major tourism area as well. The Aussies are fiercly resilliant & resourseful people. They will get through the beating Mother Nature is giving them.