Australian Reinsurance Pool Corporation (ARPC) has provided preliminary loss estimates on ex-Tropical Cyclone Alfred, with initial modelling indicating that total losses covered by the Cyclone Reinsurance Pool are approximately A$1.7 billion.
The ARPC noted that this estimate is likely to change as further assessments are conducted and more claims data becomes available.
If losses for the reinsurance pool amount to A$1.7 billion, the total insurance industry loss is expected to be higher.
Ex-Tropical Cyclone Alfred made landfall on the Queensland coast on Saturday, March 8, 2025.
The cyclone pool provided coverage for damage occurring between 8:30 AM AEST on Friday, February 28, 2025, and 6:00 AM AEST on Monday, March 10, 2025.
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The total cyclone pool coverage period for ex-Tropical Cyclone Alfred was close to ten days (237.5 hours).
The ARPC suggested it has comprehensive arrangements to pay reinsurance claims to insurers for cyclone events, supported by premiums, reserves and the $10 billion Commonwealth guarantee.
ARPC Chief Executive Dr Christopher Wallace, commented, “While it will take some time to gain a clearer picture of the damage following ex-Tropical Cyclone Alfred, our teams remain ready to help insurers process claims and facilitate the recovery process.
“Our teams are well prepared to manage any eligible reinsurance claims arising from this event and ready to assist insurers with submissions, including loss estimate reports and other payments, as required.”
Analysts at the Bank of America commented, “Ex-TC Alfred will easily become the cyclone pool’s largest event since inception in 2022. The pool has artificially lowered premiums for cyclone-prone areas in Australia, providing premiums which are passed onto customers at 22-38% lower than pre-pool levels in FY24.”
“In FY24, the pool received A$717m in gross written premiums for cyclone reinsurance. A loss of A$1.7bn is therefore significant (237% loss ratio) and highlights the climate vulnerabilities in Australia. It also highlights the uncomfortable alternative if losses had been covered by private markets, and not a government-backed pool.
“We believe this reaffirms the need for continued pricing discipline in Australian property insurance particularly given climate change concerns, and supports our view of a more sustained pricing cycle.”
In related news, the Insurance Council of Australia recently reported that insurers have received more than 63,600 claims related to the event.
Of the total 63,672 claims now reported, the majority originate from Queensland at 58,774, while 4,898 come from New South Wales.
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