The Australian Reinsurance Pool Corporation says it has “comprehensive arrangements” in place to manage claims from storm Alfred, which is on track to be the cyclone pool’s costliest event since it launched in 2022.

It says initial modelling shows losses covered by the pool are about $1.7 billion, backing up figures flagged last week by Treasurer Jim Chalmers.

“This estimate remains fluid and is likely to change as further assessments are conducted and more claims data becomes available,” the corporation said.

“ARPC has comprehensive arrangements to pay reinsurance claims to insurers for cyclone events, supported by premiums, reserves and the $10 billion Commonwealth guarantee.”

A spokesperson told insuranceNEWS.com.au the cyclone pool will fund Alfred reinsurance claims through earned premiums and assets held.

ARPC CEO Christopher Wallace said: “While it will take some time to gain a clearer picture of the damage following Ex-Tropical Cyclone Alfred, our teams remain ready to help insurers process claims and facilitate the recovery process.

“Our teams are well prepared to manage any eligible reinsurance claims arising from this event and ready to assist insurers with submissions, including loss estimate reports and other payments, as required.”  

The Insurance Council of Australia’s last update said more than 74,000 claims had been lodged after Alfred caused heavy rain and flooding in southeast Queensland and north NSW.

ICA has not provided an estimate on the claims bill, but S&P Global Ratings has said it expects insured losses of more than $2 billion.

S&P director Craig Bennett told insuranceNEWS.com.au today: “We understand the payment of [pool] claims will initially be made from the premiums received from the insurers to cover the risk.”

The ARPC’s 2023-24 annual report said it does not have retrocession cover for the cyclone pool, with claims to be funded via premium receipts.

“In the event that funds received do not cover the cost of claims, ARPC will use funds received from the terrorism pool and look to cover any further shortfall by calling on the government guarantee.”

The annual report said in the 2023-24 cyclone season, four storms including Jasper in December 2023 and Kirrily in January last year caused most of the pool’s insured losses.

Jasper’s estimated reinsurance claims cost is $91.33 million and Kirrily’s is $62.82 million. Since the cyclone pool’s inception on July 1 2022, its total claims cost is about $155.05 million.