February 10, 2009 - 3:39PM Two of Australia's major insurers...

February 10, 2009 - 3:39PM
Two of Australia's major insurers will bear the brunt of claims from Australia's deadliest bushfires and the floods in Queensland, a ratings agency says.

Fitch Ratings said on Tuesday the insurance industry had been stung by an increased frequency of large weather-related losses in recent years.

Suncorp Metway Ltd and Insurance Australia Group, which are understood to be still tallying costs of the devastating fires in Victoria, would get most of the claims from the fires and the Qld floods, Fitch said in a statement.

"While no announcement has been made with regards to the size of insured losses from the current events, with approximately two-thirds of the Australian personal lines market between them, IAG and Suncorp will bear the brunt of claims," Fitch said.

Fitch's Financial Institutions Group associate director, John Birch, noted as a positive the additional reinsurance protection purchased by IAG and Suncorp for the 2009 financial year.

"Although the benefits from recent rate rises may have been somewhat offset by additional reinsurance costs, it would appear to have been a wise decision," Mr Birch said.

"Terrible as these events are, at least insurers will be able to meet them with a greater degree of financial protection."

With weather conditions this financial year seemingly set to deliver another above average loss season, Fitch expects the increased reinsurance cover at the two Australian majors should allow losses from catastrophic events to be managed within full year provisions.

Furthermore, the agency noted the financial strength of the reinsurance counterparties which will help to mitigate potential credit risk.

On Monday, insurers said accurate numbers on claims on the Victorian fires would not become known for several days.