Southeast Queensland and northeast NSW may receive more heavy rain from tonight as Cyclone Alfred continues to slow down, stoking fears of severe downpours from the category 2 storm.

Industry watchers say insurers face their biggest test since the 2022 record floods, and S&P Global Ratings has estimated the cyclone may lead to insured losses of more than $2 billion.

The latest Bureau of Meteorology update, issued this afternoon, says Alfred is moving west towards the southeast Queensland coast at just 7km/h.

“Heavy to locally intense rainfall, which may lead to dangerous and life-threatening flash flooding, may occur near and south of the cyclone centre as Alfred approaches and crosses the coast,” the bureau said.

Meteorologist Jonathan How says the storm slowed on its path overnight. Heading into Saturday, the bureau expects it to be downgraded to category 1 as it moves over inland southern parts of Queensland as a tropical low. 

“We are forecast to see those impacts continuing all the way … we have seen some very heavy rainfall about southeast Queensland and northeast NSW overnight,” he said. 

“For both southeast Queensland and northeast NSW … [we’re] still expecting to see widespread moderate to major flooding. But now that the ground is very wet across NSW, that will be a particular concern with the tropical cyclone stalling.” 

Insurers will be insulated to an extent by the reinsurance pool, industry watchers say.

However, the slow-moving system has raised concerns over insurers’ exposure after the pool’s 48-hour time limit. The Commonwealth-backed pool provides cover for damage while the weather system is classified as a cyclone and for 48 hours from the time it is downgraded. 

KPMG insurance partner Scott Guse told insuranceNEWS.com.au: “Most insurers expect the claims to rise in flooding that happens thereafter or during the event where the water can’t get away, and then it flows down the coast … and depending on how long that takes, if it’s beyond 48 hours, well then, it’s the insurance companies that have to foot the bill.

“The reinsurance pool hasn’t really had too many claims at all since its inception nearly three years ago, so it’s obviously cashed up to withstand this. And we haven’t had any other major events this year, so insurers are certainly well placed to manage this as well.”

He says the slow-moving cyclone is “unfortunately, probably going to prolong the impact with flooding. So that is not good from an insurance point of view. It’ll come down to the speed of the event and what sort of flooding happens thereafter.”

Finity principal Sharanjit Paddam says Alfred is not expected to be a "test of solvency" for the insurance industry, because of the reinsurance pool.

Instead, he told insuranceNEWS.com.au, it is “primarily going to be an operational challenge for insurers and responding to the claims quickly. Managing the claims afterwards, I think, is going to be the big challenge for them.

“We’ve already seen a large number of insurers activating their contingency plans. We’ve seen them already announce that they are scaling up in anticipation of the event ... This will be a test of all the arrangements and the hard work insurers have put in place to respond to events like this.”

S&P says its $2 billion estimate is based on similar events in the past. It says the reinsurance pool takes the first layer of insured losses after an initial deductible held by the insurer, while extreme losses can be covered by the pool’s $10 billion federal government guarantee.

“We expect the [pool] and government-guarantee, if required, to respond to eligible property claims incurred up to 48 hours after the event. Where claims fall outside the pool cover – like large commercial losses or ongoing rain and flood – primary insurers will have access to their own resources and then significant reinsurance covers.”

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