Mortgage, insurance fallout in cyclone Alfred impact zones
NRMA Insurance assessor at a customer’s home in Northern Rivers post Alfred. Picture: NRMA Insurance.
Thousands of insurance claims have begun flooding in amid warnings over increased mortgage arrears and underinsurance in areas impacted by fallout from cyclone Alfred.
S & P Global Ratings warned mortgage arrears could rise across the impacted region given its heavy population density, also flagging underinsurance risks as the Insurance Council of Australia confirmed over 3,000 claims made by Sunday and hundreds more Monday morning.
RELATED: Alfred exposes shocking Aussie property insurance shortfall
NRMA Insurance assessor in Nerang where a temporary roof cover was erected post Alfred. Picture: NRMA Insurance.
MORE: Mindblowing roof job roasted in cyclone Alfred
NRMA Insurance executive general manager claims Luke Gallagher, whose firm had received over 900 claims before 7am Monday said “it’s heartbreaking to see the devastation already caused by ex tropical cyclone Alfred across South East Queensland and Northern NSW”.
“Our assessors and repairers have been on the ground conducting emergency repairs over the weekend across impacted regions to help our customers who have experienced significant damage.”
The latest S & P Global Ratings market overview warned “flooding in more densely populated cities like Brisbane could have an impact on (mortgage) arrears levels, particularly in transactions with higher exposure to Queensland and affected areas”.
“This comes off the back of the recent flooding in Far North Queensland a few weeks ago”.
Quarterly, annual movements in Australian insurance costs. Source: S & P Global Ratings.
EARLIER: Terrifying detail in Aussie cyclone’s path
S & P Global Ratings warned “more frequent and severe weather events could mean higher catastrophe-related claims”.
“The expansion of development into higher-risk areas could also increase losses”.
“Higher building replacement costs due to rising construction costs and more stringent building codes can lead to underinsurance, particularly in higher-risk areas”.
It said “property insurance is a prerequisite for loan approvals, but risks remain over insurance currency and amount of insurance coverage”.
S & P Global analyst Erin Kitson, said “in more highly populated areas, where you have more homes in these types of natural disaster events, we can see more noticeable increases in arrears just because you have more people impacted”.
“Sometimes arrears in these situations can take a little bit of time to surface, because lenders will typically offer hardship arrangements to help borrowers who are directly impacted.”
A customer’s veranda roof impacted post Alfred. Source: NRMA Insurance.
Investors were expected to fare a lot better than owner occupiers across the region given higher debt serviceability capacity off rental income, S & P Global Ratings said – which could mean more rent increases ahead for tenants in impacted areas.
The Insurance Council of Australia declared an insurance catastrophe for southeast Queensland and northern New South Wales regions which prioritises all claims related to the cyclone Alfred event since Friday February 28.
.
The post Mortgage, insurance fallout in cyclone Alfred impact zones appeared first on realestate.com.au.