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Analyst Siddharth Parameswaran said the prediction was “extremely preliminary.”
The Insurance Council of Australia (ICA), which has declared a catastrophe in the state of Queensland, said flooding accounts for one-third of natural hazard damage in the country. However, residential flood coverage in Australia varies depending on the insurer and the area. The ICA said it was too early to provide a loss estimate.
According to modeler AIR Worldwide, the additional premium for flood coverage is minimal in many areas and penetration can be high, but in flood-prone areas deductibles are as high as 50 percent. The coverage is included in many commercial policies.
Initial reports and statements indicate Queensland-based insurer SunCorp may be hit the hardest. The company told the Australian Stock Exchange it has received 1,800 claims.
Insurance Australia Group has said it has received about 600 claims.
QBE Insurance could not immediately be reached for comment. Stock prices of each company have fallen due to concerns related to potential flood claims.
Rain that began Dec. 25 and ended Jan. 3 has flooded about 347,490 square miles and affected more than 20 towns and 200,000 residents. Hundreds of roads have been closed. AIR said coal production in Queensland, the country's top producing coal state, has been severely disrupted. The Queensland Resources Council said lost coal and gas production would run to hundreds of millions of dollars.
Economists have said about $6 billion will be lost from reduced export volumes.
Crops may also be significantly affected by the flood waters, but the Queensland Farmers Federations said few farmers have flood insurance. The floods have severely disrupted the planting and harvesting of key crops such as cotton, sunflower, sugar, wheat and barley. Early estimates by farming lobby group AgForce suggest crop losses alone could exceed $1 billion, according to Guy Carpenter.
The insurance industry in Australia is working on developing greater access to flood insurance, according to the ICA. Legacy land-use decisions and a lack of flood maps have contributed to a general availability problem.