The natural disasters that have hit Australia over the past three months are likely to cost the insurance industry in the order of $3 billion.
That is the analysis of the Australian Prudential Regulation Authority (APRA), which told a Senate Committee last week that the gross insured claims from the flooding in Queensland, NSW and Victoria as well as cyclone Yasi was likely to be in the order of $3 billion, although it would be some time before definitive figures became available.
APRA chairman John Laker (pictured) told the Senate Economics committee that of the total $1.5 billion related to the Brisbane flooding and a little over $700 million to the earlier flooding in Toowoomba and elsewhere in Queensland.
Laker said what had been unusual had been the number of large adverse events that had occurred in a relative short period of time which had impacted the capital of insurers and required additional reinsurance arrangements to be put in place.
"Given the unusual circumstances, APRA has established a small team of specialist staff devoted full-time to establishing the scale of the insured claims from these events, and to assessing the impact of these claims on individual general insurers and the industry as a whole," he said.
The APRA chairman said the regulator wanted to satisfy itself that each APRA-regulated general insurer had the financial capacity, now and in the future, to meet its capital requirements and, ultimately, claims from policy-holders.
