Suncorp has notified reinsurers that it expects to receive gross claims of A$650mn (US$650mn) from the devastating flooding in Toowoomba and Brisbane earlier this month, based on an industry insured loss of A$2bn, The Insurance Insider has learned.
The loss will bring participants on both the Australian company's 1 July-renewing A$5.4bn excess-of-loss programme and A$400mn aggregate cover into play.
Unlike its biggest domestic rivals Insurance Australia Group (IAG) and QBE, Suncorp offers full flood cover as standard in-house and contents insurance policies sold in Queensland.
The insurer has, however, already stated that its "comprehensive" reinsurance programme will limit its share of losses to between A$70mn and A$90mn from what it sees as the second flooding event in the state.
Suncorp is protected by a giant Aon Benfield-placed excess of loss programme of A$5.4bn above its retention of A$200mn.
The programme is thought to be structured in five layers with the first two layers - A$300mn excess of A$200mn and A$500mn excess of A$500mn - currently on notice based on the A$650mn estimate for the flooding that hit Brisbane and Toowoomba from 8 January.
According to underwriting sources, the A$500mn second layer is dominated by Munich Re and Swiss Re, with around 25 percent lines each and the remainder spread across the international reinsurance community.
The exact make-up of the programme's first layer - set to be totalled by the most recent Queensland flood losses - is currently unclear.
It is likely, however, that participants will tally closely with those in the international property treaty market that had exposure to last September's New Zealand earthquake and the Melbourne and Perth storms that brought significant Q1 2010 claims.
Meanwhile, the second Queensland loss for Suncorp triggers its aggregate cover to protect part of the A$200mn retention on the excess-of-loss programme.
The insurer has aggregate reinsurance cover in place such that the cost of individual events in excess of A$10mn are accumulated until a A$300mn retention level is hit, The Insurance Insider understands.
Once total losses break through that retention, the policy kicks in with up to $400mn of coverage.
A series of loss events in the second half of 2010, including the New Zealand earthquake, meant that A$100mn of aggregate contribution had accumulated before the first spell of flooding hit Queensland on Christmas Day.
Suncorp has already estimated the flooding in central and south-west Queensland will hit its half-year results ending 31 December 2010 to the tune of A$130mn-A$150mn net.
Suncorp had already told investors in a 12 January Australian Stock Exchange announcement that it would likely incur reinsurance costs of around A$120mn to reinstate multiple covers for the remainder of its financial year up to 30 June 2011.
As previously reported by The Insurance Insider, industry sources are putting a market loss figure for the first round of Queensland floods at around A$500mn.
Added to the Suncorp industry loss estimate for the Brisbane and Toowoomba flooding that would take the total to A$2.5bn - well ahead of the most recent claims figure for general insurers of A$1.2bn published by the Insurance Council of Australia this week.
None of the current industry loss estimates include the impact of large commercial and mining losses.
Suncorp was unavailable for comment at time of going to press.