Tropical Cyclone Alfred, the seventh named storm in the Australian cyclone season, is expected to drive economic and insured losses in the hundreds of millions of Australian dollars at least, according to insurance and reinsurance broker Aon.
Cyclone Alfred made landfall near Brisbane on March 7th, but after a slow approach to land it had caused significant coastal impacts and erosion.
Cyclone Alfred caused impacts and damage to the southeast Queensland and New South Wales North Coast regions, with densely populated Brisbane particularly affected.
Aon notes that Alfred caused 20,300 properties to face storm surge risk, while more than 450,000 properties lost power in Queensland, meaning this storm has become the largest disaster-related outage in the state’s history.
In addition, the Gold Coast experienced substantial coastal erosion and high exposure areas were severely affected, Aon explained.
The Insurance Council of Australia (ICA) declared tropical cyclone Alfred a catastrophe on March 9th, since when the reports on numbers of insurance claims filed have been rising.
As of March 13th the figure stood at 44,700 claims, Aon’s Weekly Cat Alert Report shows, but this morning a further update from the ICA has now taken the claims filed figure above 53,000.
As of March 14th, the ICA reports 53,182 claims have been filed for cyclone Alfred, 48,621 being for homeowners property damage, 2,315 for auto claims and 2,246 for commercial policies.
Queensland has taken the brunt of the damage from cyclone Alfred, with 49,226 insurance claims filed in that state, while only 3,956 came from New South Wales.
The ICA highlighted some previous events and how much they cost, to provide some idea of where the costs from cyclone Alfred could rise to.
Tropical Cyclone Jasper (2023), cost $409 million from around 10,500 claims, while the most expensive cyclone to hit Australia remains Cyclone Tracy (1974), which normalised to 2023 values would incur $7.4 billion in claims.
Given where claims from Cyclone Jasper settled, in insurance market loss terms, it does seem there is a chance cyclone Alfred could rise to over one billion, given the number of claims already filed from this catastrophe event.
Aon commented in its report, “Although it is too early to determine the eventual financial impact and its implications on the local re/insurance market, the preliminary numbers show a significant burden on the insurance sector. However, economic and insured loss impacts are expected to reach at least into the hundreds of millions AUD.”
Finally, catastrophe bond focused investment manager Icosa Investments had shared some thoughts on cyclone Alfred prior to landfall, saying, “Whilst being signifiant in local terms, Tropical Cyclone Alfred is unlikely to cause losses that would have a wider impact on the capital balance in reinsurance markets. At worst, some riskier global aggregate retro layers in private or collateralized reinsurance markets that had already been weakened from the recent Los Angeles wildfires might see some further deterioration.
“For cat bond investors, this event poses no significant threat as only very few cat bonds cover this peril. Out of those cat bonds that do, two are already marked down significantly as they are expected to take significant losses from prior events.”
