Insured losses from Cyclone Larry are estimated to be $300-400 million, and while that will have a slight impact on insurers’ profits it won’t adversely affect the industry, according to Standard & Poor’s (S&P).

The ratings agency says while the cyclone which hit Far North Queensland last month is a major disaster for the region, its people and infrastructure, it’s only a moderate event in insurance terms.

The scale of this event is “well short” of the insured losses of $1.5 billion from the Sydney hailstorm of 1999 and $1.1 billion from the Newcastle earthquake in 1989, and is closer to the $340 million insured losses from the Canberra bushfires of 2003.

“In a number of cases, estimated losses will reach the maximum event-retention level and then be protected by reinsurance cover,” Director Ratings Services Michael Vine said.

The agency has surveyed most of the insurers affected by the disaster to gain a view of the industry’s exposure. It has noted that claims lodgement has been slow, and poor access to many areas has made it difficult for loss adjusters to do their job.

However, Mr Vine says the effects of Cyclone Larry, the softening in premium rates and further possible losses from cyclones could mean insurers’ earnings for 2006 will moderate from the strong results in 2005.

While the profitability of insurers and reinsurers will be reduced slightly from the event, the scale of the losses will have “little impact on the financial strength of the industry”.