February 1st, 2013

Floods in Eastern Australia

Posted at 9:21 AM ET

feb-1-australia-flood-smallEvent Summary

Ex-tropical cyclone Oswald tracked over parts of Queensland and New South Wales in eastern Australia between January 23 and January 30, resulting in widespread damage from flooding, severe storms and tornadoes. Floodwaters in some areas reached record levels, causing damage to thousands of properties and forcing widespread evacuations. A number of towns and cities were affected by severe flooding, including Brisbane, Ipswich, Bundaberg and Rockhampton. Bundaberg was particularly badly hit. The Insurance Council of Australia (ICA) has reported an estimated insured loss of AUD290 million (USD302 million) from the event as at 4pm on January 31. The 2013 flood event comes just two years after significant flooding hit Queensland in January 2011, which resulted in insured losses of around AUD2.4 billion (USD2.5 billion).

The map below shows the track and intensity of the Oswald system and each of the Local Government Authorities declared eligible for federal-state disaster relief funding.

feb-1-australia-flood-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®   representative for assistance or go to www.i-axs.info for further information.

Meteorological Conditions

Oswald initially formed as an area of low pressure off the Gulf of Carpentaria. The system intensified over several days, making landfall first near Borroloola, then tracking east to make landfall across Cape York Peninsula on January 21. Oswald then tracked in a southerly direction as a tropical depression along the east coast resulting in heavy rainfall across inland Queensland and New South Wales. According to NASA’s Tropical Rainfall Measuring Mission (TRMM) satellite, the system dropped over 600mm of rain across Cape York Peninsula, 300mm over inland Queensland and 400mm across Brisbane and southern Queensland. The heavy precipitation associated with the system is likely to have been enhanced by a monsoonal trough, an elongated area of low pressure, stretching from the Gulf of Carpentaria to the southern Capricornia Coast.

According to the Bureau of Meteorology (BoM), water levels in most areas are now receding having peaked on January 28 and 29. However, water levels in some towns such as Rockhampton are expected to peak toward the end of the week.

Damage Information

Reports suggest that several towns throughout Queensland and New South Wales have been significantly affected by the floods, with thousands of properties impacted.

Queensland

The most significant flooding occurred in the town of Bundaberg in Queensland, with around 2,000 homes and 200 businesses inundated, according to reports. The peak recorded flood height along the Burnett River in Bundaberg was 9.6m, which is 1.5m higher than what was recorded during the 2011 floods.

However, the flood levels in Queensland’s capital of Brisbane were lower than expected, with a peak level of 2.0m at the Brisbane City gauge. Only relatively minor flooding has been reported in Brisbane and the city was spared the widespread damage it suffered in 2011 when approximately 22,000 buildings were flooded.

In Ipswich, the peak flood level along the Bremer River reached 13.9m, which is lower than the 2011 flood level of 19.4m. River levels in Rockhampton are continuing to rise and are expected to peak at a level of 8.5m during the morning of Saturday February 2. This level is lower than the peak flood level recorded during the 2011 January floods of 9.2m.

New South Wales

Significant flooding has also been reported in the town Grafton in New South Wales. A peak flood height of 8.08m was recorded here, just 2cm lower than levee height.

Commercial/Infrastructure Damage

Commercial interests and infrastructure have also been impacted by flooding, with two railway lines and one coal mine affected in Queensland. The Blackwater and Gladstone railway lines are under water and it is expected to take seven to ten days to restore services. One of Middlemount Mine’s levee banks was breached and this is likely to impact production for at least three weeks.

Insured Loss Information

The 2013 flood event comes just two years after significant flooding in Queensland, which resulted in insured losses of around AUD2.4 billion. The 2011 event affected large areas of Queensland (around 70 percent of the state) and flooded heavily populated areas.

Current claims estimates released by the ICA indicate that more than 25,800 claims have been lodged with an estimated loss of AUD290 million (USD302 million) as at 4pm on January 31. The majority of these claims will be in Queensland and the ICA expects these numbers will rise as assessors enter more inundated homes and businesses across flood affected areas. Since flood levels were significantly lower in Brisbane, it is unlikely this event will result in higher losses than the 2011 event.

Flood Insurance in Australia

Flood insurance in Australia is available to all Australian property owners in a variety of formats. The majority of insurers now offer flood cover as standard on all home and contents policies. This provides cover for properties affected by a wide range of water damages, including river flooding, storms, water runoff, drain overflow and storm surge. Several insurers provide flood cover on an ‘opt-out‘ basis, which allows the consumer to choose not to be covered for river related flooding. A few insurers also offer products which exclude flood from the policy. The latest flood coverage statistics from the ICA indicate 81 percent of policies purchased by late 2011 included flood cover, but these may not be necessarily in flood-prone areas.

Climate Outlook for Australia

The Southern Oscillation Index (SOI) has generally moved within a neutral range over the last three months, from a negative value of nine to a positive value of five. Sustained positive values of greater than eight often indicate La Niña episodes, which can result in above average rainfall in northern and central Australia. The current long-range forecasts of El Niño, which are based on sea surface temperature anomalies (SST), indicate that the SST anomaly will tend toward more negative values while remaining within the neutral range over the next nine months.

In December 2012, the Guy Carpenter Asia-Pacific Climate Impact Center (GCACIC) conducted research on the forecast of seasonal tropical cyclone activity in the Australia region. The findings suggested that tropical cyclone activity was expected to be near-normal for the Western Australia Region with a forecast of nine cyclones, while slightly below-normal for the Eastern Australia Region with a forecast of four cyclones.

Sources: Reuters News, BBC News, Agence France Presse, Australian Broadcasting Corporation, Australian Associated Press, The Australian, The Australian Financial Review, The Insurance Council of Australia, GCACIC

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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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