Non-life insurers helped by reinsurance protection
Reinsurance protection should help non-life insurers contain their earnings volatility which will result from bushfires in Australia, Fitch Ratings said.
However, the protection would be subject to the inception dates and duration of the events while prolonged fires could exhaust natural hazard allowances and therefore expose insurers to further earnings pressure.
According to Fitch, IAG and Suncorp would bear the main brut of claims and they held over 50% of the Australian personal lines market.
Also, the agency said that the impact on insurers from the recent natural disasters, such as the January 2019 Townsville floods and the 2018 Sydney and Queensland hailstorms, was limited due to reinsurance.
However, major Australian non-life groups continually increased their natural hazard allowances and strengthened their reinsurance programs in the face of both increased frequency and intensity of extreme weather events.
As far as the current bushfires in Australia were concerned, they so far resulted in 8,263 claims, totalling $644 million, since being declared a catastrophe on 8 November, 2019, according to the Insurance Council of Australia (ICA) on 6 January, 2020, with a total of 1,838 houses have been destroyed so far across several states, although insured losses have mainly been in New South Wales.
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