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PERILS estimates property market loss for Cyclone Debbie at AU$1,116 million


May 9, 2017   by Canadian Underwriter


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Tropical Cyclone Debbie – the initial loss estimate for which PERILS AG puts at AU$1,116 million – “underpins the need for reliable natural catastrophe insurance data for Australia,” suggests Darryl Pidcock, head of PERILS Asia-Pacific.

Debbie affected the Australian states of Queensland and New South Wales starting Mar. 28.

“Debbie clearly exceeds our property market loss reporting threshold of AU$500 million and made a significant impact on the insurance and reinsurance industry,” Pidcock notes in a statement Tuesday from PERILS AG, which provides industry-wide natural catastrophe exposure and event loss data covering 16 countries, including Canada.

In early April, the Insurance Council of Australia reported that it estimated insured losses to date from Debbie at AU$306 million from 28,000 claims.

Related: Swiss Re losses from Cyclone Debbie currently estimated at US$350 million

Swiss Re, or its part, noted that same month  that it estimates its claims burden from to be approximately US$350 million, net of retrocession and before tax, while the total insured market losses associated with the event is estimated at around US$1.3 billion.

Swiss Re reported at the time that Debbie is expected to result in a higher share of large commercial and corporate losses compared to similar events in the past.

The cyclone hit Australia Mar. 28 and made landfall as a category 4 hurricane, bringing with it estimated 10-minute sustained winds of almost 200 km/h to some areas, and represented the strongest such event to strike the region since 2015.

“The main disaster zone stretched more than 990 km from the point of landfall, reaching northern New South Wales,” Swiss Re noted.

Debbie has been cited by a number of insurers and reinsurers in recent 2017 Q1 financial results:

  • Berkshire Hathaway Inc. reported this month that Cyclone Debbie affected its underwriting result by more than US$100 million and that US$52 million of Berkshire Hathaway Reinsurance Group’s underwriting loss was from the event (General Re’s losses were also adversely affected);
  • Allied World Assurance Company Holdings AG recently reported it experienced US$11.0 million in catastrophe losses, or 2.0 percentage points on the loss and loss expense ratio, related to Cyclone Debbie, compared to no reportable catastrophe losses in prior-year quarter;
  • Aspen Insurance Holdings Limited’s Reinsurance loss ratio of 51.6% — compared to 48% in the first quarter of 2016 – included pre-tax catastrophe losses, net of reinsurance recoveries, of US$24.6 million, or 8.9 percentage points, primarily as a result of a tornado in Mississippi, Cyclone Debbie in Australia and other weather-related events;
  • SCOR SE’s 94.5% combined ratio was balanced by a “low level” of nat-Cat losses, which amount to one point of net combined ratio, with Cyclone Debbie in Australia being the main event as well as 3.5 points of reserve releases.

Eduard Held, head of products at PERILS, says he expects the second loss report – scheduled for June 28 – “will help to further improve the industry’s understanding of Australian tropical cyclone risk and, ultimately, facilitate its tradability.”

The second loss report will include an update of the country-wide market loss and the number of affected polices,” Held notes, while subsequent loss reports (PERILS issues four) will offer loss data at four-digit postcode level and by property lines of business.