Australia - Industry loss from April 2020 Queensland hailstorms rises 39% to A$839m
20.04.2021 317 views
The insurance and reinsurance industry loss estimate for damages from hailstorms that struck the Central Queensland region of Australia on April 19th 2020 has now been raised 39% to A$839 million by PERILS.
After this hailstorm event occurred, insurance and reinsurance industry loss reporting agency PERILS AG decided not to provide an industry loss estimate for it, as the firms initial discussions with the market suggested that losses would not rise high enough to surpass the A$500 million loss reporting threshold PERILS has set in Australia.
Eventually though, PERILS explained that due to “unusually late and significant claims development” the hailstorms warranted reporting on and delivered an estimate of A$604 million in October.
Now, that estimate has risen significantly, by a further 39%, to A$839 million, demonstrating that what once may have seemed a more minor catastrophe had the potential to become far more expensive for the insurance and reinsurance sector.
This hailstorm event occurred after severe thunderstorms developed over the Central Highlands and Capricornia districts in Queensland on the afternoon of April 19th last year.
Hail as large as 8 to 10 cm in diameter was reported and the storm was called unusual, both due to the overall size of the hail and the fact that it occurred late in the season.
The largest hail impact was recorded in Rockhampton and Yeppoon, where extensive damage, primarily to residential homes and commercial properties, was experienced.
In addition, wind gusts of up to 100km/h were also recorded in Mackay. Crop damage was also reported as some agricultural areas in the region were hit by hail related to the storms.
PERILS said this morning that its new A$839 million industry loss estimate consists of losses under both property and motor hull lines of business, but that unusually for a hailstorm event, motor losses only made up 4% of the total industry loss, the rest being in the Property lines of business.
PERILS reiterated this morning that this hail event was challenging for the industry, saying that the industry “faced several challenges dealing with late and significant claims development.”
This hail loss came after a costly period for Australian insurers and their global reinsurance counterparts, with the frequency and cost of catastrophe events triggering a number of aggregate reinsurance programs for some of the largest Australian carriers.
Darryl Pidcock, Head of PERILS Asia-Pacific, said, “During 2020, the industry experienced a number of challenging events such as the Australian bushfires, hailstorms in January and October as well as an East Coast Low event. Whilst the Central Queensland hailstorms were not as significant in industry loss terms as other events, the event has presented the industry with challenges dealing with significant claims being lodged some months after the event. Lessons gained from these losses include the effect of local building regulations to better understand potential exposures and how these can be captured in models. We are very pleased to support the market by providing this industry loss data to facilitate improvements in modelling especially regarding vulnerabilities and would also like to thank our insurance partners for enabling us to compile this report.”
Source - https://www.artemis.bm
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And then (the U.S.) stopped that for a brief period of time and there was a chance that it was going to come back on right away.”LPI has historically been a hard sell to beef producers due to policy cost. Fulton estimates a high rate of $50-$60 per calf for a calf policy (the program has three cattle policies available: calf, feeder and fed) on a 10-year margin.However, thanks to high prices in all cattle categories in recent years, margins are much better today. That offers extra incentive to take out an LPI policy because beef producers will have more to lose once the bull market (in investment terms) goes bearish, he says.“$50 to $60 in today’s market is not as significant. It’s not as big a barrier, but it’s still a large barrier when talking about an individual animal (and) having to pay $50 or $60 just to be able to cover it.“If you get 60 per cent of the cost of your insurance policy covered, it really changes the motivation and the desire to actually cover off that risk because you’re not using up a bunch of your profit margin just to insure it.”Beef cattle graze in a pasture in Saskatchewan. Photo: Michael RobinOther LPI changes neededFulton would also like to see a widening of LPI’s application window. Although applications for feeder and fed policies are accepted year-round, calf policies are only available from February to June each year. However, risk exposure continues long past June.“So for most of the year the tool is not accessible.” English has a technology-based suggestion for improving the program. He says the application website needs to be more user-friendly for cell phone users and especially those who live in areas with limited internet bandwidth.“It’s just a little daunting the first time that you’re (applying) … It’s kind of clunky. It’s not iPhone friendly and I do everything on my phone.“We put all our records of our cattle on our phone, check on our weather. Everyone uses their phones more than a laptop and so I think if they made it so that it was a little easier to use on your phone, it’d be that much easier also.”Balanced outcomesThere could be some positive tradeoffs with other government BRMs if a cost-share arrangement for LPI is developed, says Fulton. 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They don’t make an AgriStability claim because they’re already covered off through their insurance.”Government willing to talkThe beef industry is slowly but surely catching the ear of government on cost-shared LPI policies. Fulton says both the federal Conservative and Liberal parties — motivated in part by U.S. tariff threats — were interested in providing better risk management tools to farmers prior to the federal election.“This represents a cattle industry-developed program that works really well and so when we started to get exposed to the tariff issues, it really changed the conversation. It just made it very obvious that there was a deficiency here and they identified that.”Fulton has spoken with new federal Agriculture and Agri-Food Minister Heath MacDonald and hopes to meet with him soon to address the uncertainty and risk the industry is facing. He’s counting on the Prince Edward Island-dwelling MacDonald having an understanding of LPI, given Maritime producers have been eligible since last year.Countervail fearsAn attendee of Manitoba Ag’s Navigating Livestock Price Insurance webinar on May 8 asked if cost-shared premiums would trigger countervail action from the U.S. The answer is “unequivocally no,” says Fulton.“The industry is not at all concerned about a countervail duty related to livestock price insurance cost-shared premiums,” he says.“Our American counterparts have a very similar program that is cost-shared and it is really structured similarly to their crop insurance program, and so they’re addressing what they’ve identified to be a gap in risk management tools offered for farmers and inequity for livestock operations.”Source - Manitoba Cooperator
