SINGAPORE, Jan 28 (Bernama-BUSINESS WIRE) — AM Best believes Australian insurers are well-capitalized and should be able to withstand losses from the recent bushfires, aided by support from reinsurance partners. However, meaningful bushfire losses passed on to reinsurers may result in upward pressure on reinsurance rates and tightening of terms and conditions in upcoming renewal windows.
The new Best’s Commentary, “Australian Insurers Able to Contend With Mounting Bushfire Losses,” notes that the 2019-2020 bushfire season will be one of the costliest for Australia. The bushfires, which started in September 2019, have devastated an area in excess of 10 million hectares across south and eastern Australia. Given the scale of the fires and geographical loss spread, Australia’s market-leading nonlife insurance groups are expected to pick up the lion’s share of insured losses, while smaller, niche or regional insurers may be exposed to portfolio concentrations within the fire zones.