Floods and fire, but insurers still expected to clean up
THE COST to the Insurance Australia Group of the recent floods and bushfires has reached $175 million but analysts still expect profits in the insurance industry to increase this financial year.
IAG, which operates NRMA Insurance and CGU, has to date received more than 13,700 claims related to floods in Queensland and northern NSW last month.
These claims are expected to cost IAG between $120 million and $140 million.
Another 600 claims have been lodged for damage caused by bushfires in NSW, Victoria and Queensland in January, costing an estimated $35 million.
With assessors still in the field IAG's costs could still rise, but its reinsurance program limits the impact of the first natural disaster of the year to $150 million.
Last week, Suncorp said that its costs from the floods would not exceed $220 million, leaving at least $103 million for the rest of the 2012-13 financial year.
Analysts do not expect the recent floods and bushfires to have a major financial impact on insurers, with profits set to rebound after the effect of the Queensland floods and New Zealand earthquakes in 2011.
Two Commonwealth Bank analysts, Ross Curran and Naveen Patney, have forecast a net profit of $616 million for IAG in the 2012-13 financial year, almost triple what it made in the previous year. Suncorp's full-year insurance profit is forecast to reach $819 million, up 66 per cent on the previous year.
QBE Insurance reports on the calendar year, and will release its results for last year on February 26. CBA's analysts expect it to make a net profit of $US843 million ($819 million), 20 per cent more than in 2011.