Since Cyclone Alfred's aftermath, Suncorp Group, the largest insurer in the Queensland, says already received more than 7,800 claims amounting to billions.
👉 Background: Cyclone Alfred has hit Queensland and NSW over the past few days and wreaked havoc on beaches, houses and all buildings. The TikTok videos of the wild winds and the damage have been quite apocalyptic. Thankfully, the Queensland Premier has declared that the worst of the cyclone is over.
👉 What happened: Now it’s time for the insurers to count the claims — and their costs. In fact, Suncorp Group, the largest insurer in the Queensland market has run the numbers and they’ve already received more than 7,800 claims across the affected states, amounting to billions of dollars in compensation.
👉 What else: But, thankfully for Suncorp, they’re backed by the cyclone reinsurance pool, aka the government’s $10 billion guarantee for commercial insurers.
What's the key learning?
💡Reinsurance is the insurance for insurance companies. To reduce their risk, insurers often buy their own insurance from bigger financial institutions. This helps them cover big payouts without going broke.
💡In cyclone-prone areas of Australia (like Northern QLD, WA, and NT), insurance premiums were skyrocketing. Get this: in 2023, the average insurance was 50% higher in Northern Queensland compared to other regions of Australia — and that meant many people couldn’t afford to cover their houses.
💡To bring these costs down, the Australian Government created the Cyclone Reinsurance Pool to cover insurance claims made in the first 48 hours of the cyclone event. So instead of insurers dishing out billions themselves, they pass most of these costs to this government-backed pool.
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