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Insurers Estimate Australia Flood Costs to Surge to Over $2 Billion

Posted on 16 Feb 2011

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The Insurance Council of Australia has reported that Australian insurers expect to pay out more than A$2 billion ($2 billion) for damage caused by deadly floods in the country's northeast this year while Cyclone Yasi could cost another A$500 million.

In the Queensland state, the floods killed at least 35 people, swamped 30,000 homes, shut mines and wiped out roads, rail lines and bridges. The floods were followed by the massive Cyclone Yasi, which devastated the state's sugar and banana crops.

'I would expect we would be approaching a final figure in the next three months,' Karl Sullivan, the council's general manager of risk and disaster told a parliamentary inquiry.

The latest damage estimates came as the northern city of Darwin was battered by a new category 1 cyclone, which drenched the city with flooding rain and which threatens to intensify as it moves to the west along the coast.

Sullivan said insurance companies had so far received 43,000 claims for the Queensland floods and 30,000 claims for cyclone Yasi, which struck Queensland's northern coast and the main sugar, banana and tourism region.

Sullivan was giving evidence to a parliamentary hearing into a temporary floods tax, designed to raise about A$1.8 billion over 12 months to help pay to rebuild infrastructure.

Prime Minister Julia Gillard is struggling to get parliamentary support for the tax, which will go towards an estimated A$5.6 billion bill for the national government's share of the rebuilding.

Acting national Treasury Secretary Nigel Ray told the hearing the damage bill was preliminary and full update of the impact of the floods and cyclone on infrastructure and the economy would be included in the May 10 budget.

In Brisbane, Queensland state Treasurer Andrew Fraser said the damage bill from Cyclone Yasi would be around A$800 million, with the national government responsible for about A$600 million of that.