Disaster insuranceAustralia’s disasters cost insurers $25.6 billion
The series of disasters that struck Australia this year including the Queensland floods, Cyclone Yasi, and the New Zealand earthquake has hit local insurers particularly hard with a combined loss of $25.6 billion
The series of disasters that struck Australia this year including the Queensland floods, Cyclone Yasi, and the New Zealand earthquake has hit local insurers particularly hard with a combined loss of $25.6 billion.
According to Aon Benfield, a global reinsurance advisor, sound capital management practice will saveinsurance companies almost $16 billion thanks to reinsurers, the firms that insure the insurers.
The gain of the insurance companies comes at the severe loss of reinsurers, which are currently suffering from some of their worst losses in history.
Munich Re, the world’s largest reinsurer, recently announced that the company was suffering from its highest ever loss year on record with an estimated $265 billion worth of economic losses in the first half of the year alone.
This year’s heavy disaster outlays have forced many insurers to raise insurance rates in advance of expected increases in reinsurance costs.
Malcolm Steingold, the chief executive of Aon Benfield’s Asia Pacific operations, said while rate increases are inevitable, reinsurers are well insulated from any shock increases.
“There has been significant catastrophe loss activity over the last 12 months and the impact on pricing is going to be varied,” Steingold said. “Notwithstanding all these pressures there is certainly ample reinsurance capacity that remains available for Australian insurance programs.”
