February 7th, 2012

Floods in Eastern Australia

Posted at 12:08 PM ET

australia-flood-feb2012-smallHeavy rain has caused widespread flooding across parts of Queensland State and New South Wales State in eastern Australia, damaging hundreds of homes and businesses and forcing thousands of people to evacuate their properties. The floodwaters have reached record levels in some areas, isolating several communities. The Australian Bureau of Meteorology (BoM) has warned that the floodwaters will continue to inundate some communities for weeks to come. As of February 7, the BoM has 19 flood warnings in place in southern Queensland and northern New South Wales. More than 1,000 properties in the region have been flooded, according to reports.

The floods have been triggered by a period of heavy and persistent rain in the region since the beginning of February. According to the BoM, up to 275 millimeters of rain fell over a seven day period in parts of Queensland. The heavy rain caused major flooding along several rivers in Queensland and New South Wales, including the rivers of Balonne, Bulloo, Condamine, Cooper, Culgoa, Macintyre, Maranoa, Moonie, Namoi, Paroo and Warwick.

australia-flood-feb2012-big

Hazard data illustrated in the CAT-i map was taken from i-aXs®, Guy Carpenter’s web-based risk management platform. i-aXs users can view impacted areas on any map as well as see how their portfolios were affected. Please contact your broker or GC Analytics (SM) representative for assistance or go to www.i-axs.info for further information.

The federal government has activated disaster assistance for flood victims in both states. The Insurance Council of Australia (ICA) has declared the floods a catastrophe for the inundated communities in southwest Queensland, including the towns of Roma, Mitchell, Charleville and St. George. Although no official insured loss estimate has been released as of yet, the ICA said it expects the event to have a smaller impact than the floods of 2011, with insurance payouts in the tens of millions of dollars.

Damage Assessment

Reports said several towns in Queensland and New South Wales have been flooded, with hundreds of properties inundated. Thousands of people have been forced to abandon their homes and tens of thousands of people have been cut off. Several roads and bridges have also been damaged, according to reports. In a statement on February 3, New South Wales Minister for Emergency Management Robert McClelland said the floods in Queensland and New South Wales had caused an estimated AUD50 million (USD53.5 million) of damage. One person has been reportedly killed by the floods in Queensland.

Queensland

Queensland has suffered significant flooding over the past week as some parts of the state continue to recover from the devastating floods that took place just over a year ago. Southwestern regions of Queensland have been particularly badly affected by the latest flooding after being hit by above average rainfall for a sustained period. The level of the Balonne River in the town of St. George rose to 13.85 meters on February 7, breaking its previous record of 13.4 meters set in March 2010. Mandatory evacuations are in place in St. George, prompting around 2,500 people to leave their homes. Reports said up to 60 homes and businesses in St. George have already been inundated and there are fears of further property damage as the Balonne River reaches its peak later today.

Officials had initially estimated the river would peak at around 15 meters at St. George, breaching the town’s 14.5-meter levee, but they have now revised down the predicted peak to just over 14 meters. Nonetheless, the authorities said the current risks remained too high to allow people back to their properties. Officials now hope St. George residents will be able to return to their homes by the end of the week. Authorities are also preparing for flooding in a number of small towns downstream of St. George, including Dirranbandi and Cunnamulla.

Severe flooding has also hit the towns of Mitchell and Roma in Queensland. According to the Queensland Emergency Service, around 280 homes in Mitchell (or around 70 percent of homes in the town) were flooded while at least 380 homes in Roma were affected by the floodwaters. Flooding has also been reported in Charleville, although the damage here was limited after the town’s levee held. Clean up operations have started in Mitchell, Roma and Charleville as the flood levels have started to recede. However, efforts are in danger of being hampered by more bad weather after the BoM issued a severe thunderstorm warning for the area.

New South Wales

Neighboring New South Wales has been also affected by the heavy rainfall and flooding. Reports said more than thousands of people in rural communities were isolated by the floodwaters. Several areas in the state have been declared natural disaster zones, including Bellingen, Byron, Kyogle, Lismore, Richmond Valley, Clarence Valley, Coffs Harbour, Inverell, Nambucca, Kempsey, Tweed Shire, Tenterfield, Greater Taree, Moree, Narrabri, Gunnedah and Gwydir.

The town of Moree was particularly badly hit after reports said it experienced its worse flood in 60 years, isolating around 10,000 people. More than 600 people in the town were relocated to evacuation centres as the Mehi River peaked at 10.69 meters in early February. Reports said parts of the town turned into “an inland sea”. About 90 percent of Moree’s residents have now returned home to start the clean up process, according to reports. Officials in Moree said more than 300 properties were severely flooded and a similar number were affected to a lesser extent.

Elsewhere in the state, an estimated 5,000 people remain isolated in several communities, including Wee-Waa, Gravesend, Narrabri and other rural properties in the region. Officials said Wee Waa’s 2,300 residents are expected to emerge from isolation by February 10 if there is no further rainfall. However, the State Emergency Services (SES) said an additional 10,000 people in northwestern New South Wales are likely to be cut off as the flooding from Queensland moves downstream over the next few days and weeks. The first river peak could hit the town of Goodooga, near the Queensland border, as early as February 8, the SES said. Other communities expected to be affected included Walgett, Collarenebri, Lightning Ridge and Cumborah, with floodwaters eventually expected to reach Bourke in March.

Industry and Agriculture

Queensland is the world’s biggest exporter of coal but officials said the mines in the state have so far been largely unaffected by the floods. The agriculture industry has not been so fortunate, however. According to the farming group AgForce, grazing land, cotton farms and food crops are all expected to be affected by the flooding. Industry body Cotton Australia said it was too early to fully assess any damage to cotton crops due to lingering floodwaters in some areas. Despite this, the body still expects a record national cotton harvest of 5 million bales this year, outpacing last year’s record 4 million bales.

Insured Loss Information

The 2012 floods come just over a year after Queensland was devastated by severe flooding in January 2011. The 2011 event affected a much broader area of Queensland (around 70 percent of the state) and flooded heavily populated areas, including the capital of Brisbane. According to the ICA, last year’s flooding inundated around 30,000 properties and caused insured losses of AUD2.38 billion.

Although no precise insured loss estimate has been released for the February 2012 floods as of yet, the ICA said it expects the event to have a smaller impact than the floods of 2011, with insurance payouts in the tens of millions of dollars. The ICA declared the floods a catastrophe for the inundated communities in southwest Queensland, including the towns of Roma, Mitchell, Charleville and St. George. The ICA added that the situation in northern New South Wales is being monitored but a catastrophe declaration has not yet been made.

Flood insurance policies in Australia are currently being reviewed following recommendations by the National Disaster Insurance Review in response to the January 2011 floods. The recommendations include implementing a standard definition of flood for home and contents insurance policies and offering mandatory flood insurance with consumers able to opt out (residential flood coverage in Australia has traditionally varied considerably by insurer and location). Although the federal government is yet to respond to the review, some insurers have started to introduce mandatory flood cover.

Sources: Reuters News, BBC News, Agence France Presse, Australian Broadcasting Corporation, Australian Associated Press, The Australian, The Australian Financial Review

Guy Carpenter publishes CAT-i reports for major natural catastrophes worldwide. These reports cover catastrophes including worldwide tropical cyclones, earthquakes, major UK and European floods and any other natural event that is likely to incur a significant loss to the (re)insurance industry. Please email CAT.i@guycarp.com if you wish to be added to the free email distribution list.

Guy Carpenter compiles RISK-i reports for major technological or man-made events worldwide. These reports cover risks to property, transport and life including explosions, fires, crashes, engineering disasters and terrorist attacks that are likely to incur a significant loss to the (re)insurance industry. Please email RISK.i@guycarp.com if you wish to be added to the free email distribution list.

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