Catastrophe data company Perils has raised its estimate for this year’s eastern Australian flooding to $4.895 billion as the insurance industry deals with a high volume of claims and rising costs.

The Zurich-based firm increased its estimate from an April figure of $3.99 billion and slightly widened its event timeframe to encompass February 20 to March 11, better reflecting the range of loss periods applied by affected insurers.

“The complexity and volume of claims caused by this weather event are presenting significant challenges to the insurance industry which is reflected in the increase in Perils’ second loss estimate,” Head of Asia-Pacific Darryl Pidcock said.

“A key driver is claims inflation due to rising labour and supply costs which has become a critical issue for the industry.”

Perils says its estimate includes losses from the property and motor hull lines of business and is based on data collected from the majority of the Australian insurance market.

The period of heavy rainfall that caused the flooding occurred as a monsoon trough along the southeast Queensland and northern NSW coast was blocked by a high-pressure system. An East Coast Low then developed as the trough moved southwards bringing onshore moisture and heavy rainfall in NSW during early March.

Perils will provide a six-month update on September 11 for the event, which has become Australia’s worst flooding catastrophe.

Insurance Council of Australia normalised figures from the end of last month showed the floods had overtaken the Newcastle earthquake in loss severity, becoming the nation’s fourth costliest disaster.