Ex-Tropical Cyclone Alfred will cost the reinsurance pool about $1.7 billion in claims, according to Treasurer Jim Chalmers, who has raised concerns over longer-term impacts such as higher building costs for insurers.

More than 63,000 claims have been lodged with insurers since Alfred crossed the Queensland coast on March 8. The cyclone pool’s 48-hour coverage limit was reached on March 10 at 6am.

Based on the Insurance Council of Australia claims tally, Dr Chalmers says early modelling suggests “losses covered by the reinsurance pool are around $1.7 billion”.

The federal Treasurer, speaking yesterday in Queensland, said the government has allocated about $1.2 billion in its upcoming budget to support communities affected by the storm. He will deliver the 2025-26 budget next Tuesday evening.

“It’s a combination of the hardship payments and the allowance in the social security system with the asks that we get from the state governments and local governments to rebuild local infrastructure,” he said. “We didn’t get the worst-case scenario, but we still got a lot of substantial damage … we’ve had damage to local infrastructure … and so we’ve made a sensible provision because of all of that. We made a sensible provision for the recovery and rebuilding communities.”

Earlier this week, Dr Chalmers told Sky News he has been engaging with insurers after the storm, which has been declared a catastrophe by ICA.

“I’ve been speaking with the insurers about their workforces, for example,” he said. “They expect a little bit of upward pressure on building costs as well, but hopefully we can keep them contained because we’ve made a lot of progress together on that part of inflation and on inflation more broadly over the last couple of years.”

Asked if insurance will be unaffordable in parts of Australia, and if there is a role for government, Dr Chalmers said: “Obviously, it’s a key concern. We were talking a moment ago about the drivers of inflation, and insurance costs is one of those drivers.

“And unfortunately, it does mean that some people will opt out of the insurance that they need, particularly in areas which are frequently hit and hardest hit.

“I’ve been in pretty regular contact with the insurers, particularly Suncorp, RACQ and some of the others, to make sure that for people who do have a policy, they are being dealt with quickly, expeditiously, but I also know that it’s important more broadly, the system.”

He said the cyclone pool is “an important backstop. It has had a little bit of an impact on premiums. We’d like it to have more of an impact on premiums, but it’s one of the things that the federal government is doing.”

Assistant Treasurer Stephen Jones and MP Daniel Mulino, who chaired the federal inquiry into the 2022 floods, have explored “what else could responsibly be done. But I don’t want to pretend that we have this insurance market perfectly fixed,” Dr Chalmers said.

“We’ve done some meaningful things. We’re working closely with all of the stakeholders, but it is still a big driver of inflation. It still is a big concern for us.”