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UPDATE 1-Australian insurer IAG receives 8,000 claims after Sydney flood, expects more

(Adds details on floods, natural perils claims costs, background)

March 26 (Reuters) - Insurance Australia Group Ltd said on Friday it had received around 8,000 claims after heavy rains and flooding hit New South Wales and parts of Queensland, with the figure expected to rise further.

Insurers have braced for claims to swell as relentless rains - the worst downpour in more than half a century - burst river banks, inundated homes, roads, bridges and farms and cut off entire towns in Australia’s east.

IAG estimated net cost due to the event to be around A$135 million ($102.34 million), citing past experiences with similar incidents.

The insurer said its net claim costs from natural disasters for the eight months to Feb. 28 stood at about A$375 million.

The flooding event, however, is expected to increase the figure to about A$660 million to A$700 million for fiscal 2021, against an allowance of A$658 million, IAG said.

The heavy rains have added to the woes of Australian insurers, which were already facing a tough period after a court ruled last year that pandemic exclusions should not be used to reject claims from businesses affected by the coronavirus.

IAG was forced to raise up to A$750 million in November to shore up its balance sheet to cushion a drop in its regulatory capital due to the expected recognition of the business interruption claims provision.

$1 = 1.3191 Australian dollars Reporting by Rashmi Ashok in Bengaluru; Editing by Aditya Soni

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