Floods hit Suncorp

Suncorp, which has the largest insurance market share in Queensland, is likely to be worst hit following the state’s flood disaster, with claims estimated to cost the insurer at least $200 million.

This was the prognosis given by Aviva Investors’ investment manager Andrew Hamilton, who said once claims exceeded the $200 million mark Suncorp would trigger its aggregate reinsurance program and its reinsurers would cover the remaining cost.

Hamilton said that Suncorp was hardest hit because it was the only insurer in Queensland providing flood cover under its Suncorp-branded policies.

“The impact on Insurance Australia Group and QBE is relatively minor as neither of these companies insure against flood damage in Queensland,” he said.

“However, this lack of cover looks set to become a major ongoing political issue that has the potential to affect the industry’s approach to flood cover in the future,” Hamilton said.

Aviva Investors identified the insurance industry as one of the three sectors worst hit following the state’s excessive floods.

The company said transport and retail sectors would also suffer, which had important investment implications.

According to Hamilton, the chance of more heavy rainfall and further flooding in Queensland could have an additional impact on the insurance industry.