It comes as the claims tally from floods in Sydney reaches 8,415, with numbers expected to grow substantially

Australian insurance giant IAG has announced the completion of its FY23 aggregate reinsurance program. Its cover provides protection of $350m in excess of $500m, with individual qualifying events capped at $200m in excess of $50m per event.

Third and fourth event financial year occurrence covers have been purchased to provide $100m of protection for events greater than $150m.

The aggregate cover has been placed to the extent of 67.5% to reflect IAG’s cumulative whole-of-account quota share arrangements.

After allowing for quota share arrangements, the combination of all catastrophe covers in force at 1 July 2022 results in IAG having a maximum event retention of $135m.

The insurer has extended an arrangement for a 2.5% whole-of-account quota share that was due to expire on 30 June 2022 for a further twelve months.

Meanwhile, its quota share arrangement with Munich Re - covering 30% of the combined compulsory third party (CTP) book - has been extended for a period of three years to 30 June 2025.

Sydney flood claims begin to mount

It comes as claims begin to pour in following the extreme rainfall and flooding that has impacted large parts of Sydney, the Hunter and mid-north coast this week. 

So far, insurers have received 8,415 claims costing $97.9m, but losses are expected to grow substantially.

The Insurance Council of Australia (ICA) currently estimates an insurance loss of $97.9m. But with flood waters still receding and loss adjusters waiting to assess the damage the numbers are expected to rise over the coming days and weeks. 

This latest event follows major flooding across the East Coast during February and March. Claims costs have crept towards $5 billion four months after the ICA declared the event a catastrophe.

Only Cyclone Tracy (1974) and the Sydney hailstorm (1999) caused more insured losses, and this year’s East Coast Flood is the costliest flood in Australian history.

While the El Nino weather cycle has weakened (it is linked with a rise in extreme precipitation events) there are warnings from climate scientists that another could form as the Australian summer approaches.

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