Floods a new blow for insurers
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SYDNEY, Jan 29 AAP
January 29 2013, 3:29PM
Insurers are already feeling the pain from ex-tropical cyclone Oswald, with more than 6,500 claims lodged and the damage bill set to rise above $100 million.
Brisbane-based Suncorp, the owner of AAMI and GIO, is set to be the worst affected of the major insurance companies, already fielding about 4,000 claims for flood and storm damage.
Insurance Australia Group, which operates the NRMA Insurance and CGU businesses, has received about 2,000 claims.
The Insurance Council of Australia estimates about $72 million in claims have been lodged in Queensland to date, and that is set to increase significantly as floodwaters in Bundaberg and northern NSW continue to rise.
Many displaced residents are also yet to return to their homes to survey the damage.
"It is still early days and our focus is on assisting customers and we have emergency repairs underway," an IAG spokesperson said.
Both IAG and Suncorp said they were financially prepared for the latest natural disaster, given a relatively quiet 2012, meaning there is unlikely to be an immediate impact on premiums.
Australia's other major insurer, QBE, is likely to have a smaller exposure to the latest natural disaster, given its global focus.
Shares in all three insurers fell heavily on the local market when trade resumed on Tuesday after the Australia Day long weekend.
Suncorp shares were the worst affected, down 29 cents, or 2.7 per cent, to $10.62 at 1503 AEDT.
QBE was down 29 cents, or 2.5 per cent, to $11.30 and IAG shares were down two cents, or 0.4 per cent, at $$4.90.
Ex-tropical cyclone Oswald was creating even more uncertainty for an insurance sector still dealing with the impact of Queensland's 2011 floods and Christchurch's earthquakes, IG Markets analyst Stan Shamu said.
"Insurers have been out of favour for some time, and I think investors are really now starting to see how uncertain their earnings are, particularly with all these global events we've seen over the past couple of years or so," he said.
"These stocks have so many problems, and any opportunity or any little hiccup along the way will probably see most investors try to move elsewhere."
The insurers are likely to provide a clearer picture of the financial impact from the latest floods when they report financial results in late-February.
With the low pressure system forecast to move out to sea in the coming days, the final damage bill is unlikely to reach anything near the $2.4 billion cost of the 2011 floods.
Meanwhile, all major banks are extending their support to flood-hit customers, offering changes to loan repayments and other financial measures for home and business owners.
By Drew Cratchley