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By Brenna Hughes Neghaiwi
ZURICH, April 13 Cyclone Debbie cost Swiss Re
an estimated $350 million and the insurance industry
roughly $1.3 billion, the world's second-biggest reinsurer said
on Thursday, an unusually high loss that could see reinsurance
prices rise in Australia.
Cyclone Debbie, a Category 4 storm, slammed into Australia
on March 28. The storm, one level shy of the most
powerful Category 5, killed six people, smashed tourist resorts,
brought down power lines and shut coal mines, before moving on
to New Zealand.
"We are a lead reinsurer in this market and estimate that
Cyclone Debbie has caused higher commercial and corporate losses
compared to similar events in the past," Swiss Re Chief
Underwriting Officer Matthias Weber said in a statement.
Reinsurers act as financial backstops for insurance
companies and help them pay for large claims from hurricanes or
earthquakes in exchange for part of the premiums.
The high losses were a result of the densely populated,
commercially active area the storm hit, a spokeswoman said, with
hundreds of residential and commercial buildings flooded and
thousands of residents and businesses evacuated from the region.
The disaster zone stretched 1,000 km (600 miles) from
Queensland state's tropical resort islands and Gold Coast
tourist strip to the farmlands of New South Wales state.
Five miners in the cyclone-hit region, including BHP
Billiton and Glencore, have declared
force majeure -- a clause typically invoked after natural
disasters -- since multiple landslides and flooding knocked out
major coal rail networks.
Despite hindering profits, higher catastrophe costs can ease
pressure on pricing in the reinsurance markets.
The expensive cyclone may lead to a rise in Australian
property & casualty reinsurance pricing in the next July or
January contract renewals rounds, a spokeswoman said. However,
the event did not impact business written in April, which is
largely concentrated in Asia.
Shares in Swiss Re fell 0.9 percent by mid-morning, lagging
Europe's overall insurance index, which was down 0.5
"The loss from cyclone Debbie is higher than expected and
reflects a bad start to the year because this high-claims event
will not reduce reinsurance capacity in the market," Vontobel
analyst Stefan Schuermann said in a note.
(Additional reporting by Joshua Franklin, editing by John
Revill and Michael Shields)