ASX-listed insurers have taken a hit today as the Sydney storms have triggered big falls in the Insurance Australia Group Ltd (ASX: IAG) share price and Suncorp Group Ltd (ASX: SUN) share price today.
The IAG share price tumbled 3.7% to $6.69 and the Suncorp share price plunged 4.2% to $12.38 during lunch time trade when the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) was down 0.9%.
The hailstorm that hit our largest city yesterday could be the costliest single event for our insurers with the Insurance Council of Australia classifying the storm as a catastrophic event.
Suncorp said this afternoon that it was too early to say exactly how much the disaster could cost the insurer, but it pointed out that its reinsurance cover means its maximum liability was $250 million.
That wasn't particularly comforting given the figure is a sizable chunk of its FY18 pre-tax profit of circa $1.6 billion.
Before yesterday's disaster, Suncorp had estimated that the total natural hazard costs across Australia and New Zealand for the six months to December 31, 2018, would be between $350 million to $360 million.
Suncorp has so far received 7,800 claims with more expected over the coming days.
IAG also issued an update this morning stating that the pre-tax cost of the Sydney storms will be around $169 million.
Management estimates that its year-to-date FY19 net natural peril claims will hit $410 million to $430 million pre-tax (post-quota) with yesterday's foul weather in our biggest city being the costliest single event for insurer this financial year.
IAG has so far received 6,500 claims and this figure is almost certain to increase.
Hail storms are believed to be one of the costliest disasters for insurers, particularly if it hits s densely populated area, according to the Australian Financial Review.
The timing also couldn't be worse as many repair shops are closed for the holiday season and this will force prices up for repairs.
The sell-off in the insurance sector also coincides with a period of rising risk aversion as investors fret about the health of the global economy.
Other big falls on the ASX 200 include the Speedcast International Ltd (ASX: SDA) share price, Vocus Group Ltd (ASX: VOC) share price and Orocobre Limited (ASX: ORE) share price.
