The aftermath of Cyclone Alfred continues to unfold in Australia, leaving communities across southeast Queensland and northern New South Wales struggling with severe flood damage and the economic cost of the disaster.
The disaster has led to significant disruptions, with businesses forced to close, residents displaced, and infrastructure heavily impacted.
According to ABC News, early economic estimates suggest that the cyclone’s toll could reach A$1.1 billion per day, with the financial strain extending beyond immediate recovery efforts.
Meanwhile, the insurance sector braces for an overwhelming surge in claims, projected to exceed A$2 billion, adding further pressure to an already burdened industry.
Immediate Economic Losses, but a Recovery Expected
Economic activity in affected regions has been severely disrupted, particularly in urban areas such as Brisbane and Hervey Bay, where businesses were forced to shut down for several days. The Queensland and New South Wales economies collectively represent around 15% of Australia’s GDP, making the financial impact significant.
According to Shane Oliver, chief economist at AMP, the economic hit from Cyclone Alfred could amount to A$1.1 billion per day. However, he emphasised that this would likely be a short-term shock, as reconstruction efforts would act as a stimulus and help recover lost economic activity.
Insurance Sector Under Pressure as Claims Surge
The Insurance Council of Australia has reported over 22,000 claims so far, with figures expected to rise further as flood-affected homeowners and businesses assess the damage. More than 12,000 new claims were submitted within just 24 hours between Monday and Tuesday, illustrating the scale of the disaster.
According to S&P Global Ratings, the total insurance bill could surpass A$2 billion, ranking Cyclone Alfred among Australia’s most costly natural disasters in recent years.
The rapid escalation of claims is likely to put upward pressure on home insurance premiums, which have already increased by 40% over the past three years due to rising construction costs and climate-related risks.
Andrew Hall, CEO of the Insurance Council of Australia, highlighted the challenges faced by the sector :
We’ve seen that over the last five years, insurance prices have been keeping pace with, not only the cost of natural disasters, but also the cost of inflation.
Building inflation has gone up 40 per cent in the last three years, and when we think about the challenge that insurers have, they’re trying to anticipate what the cost would be to rebuild properties in 12 months’ time, or 18 months’ time, if the worst happens.
Inflation Concerns and Broader Economic Risks
Beyond direct damages, Cyclone Alfred could also contribute to inflationary pressures. The agricultural sector may suffer from crop losses, potentially affecting fruit and vegetable prices in the coming months.
However, the most significant long-term financial impact is likely to be on insurance premiums, as natural disasters continue to strain the industry.
Over the past five years, insurers have paid out A$1.02 to A$1.03 for every dollar collected in home and contents insurance, making it an increasingly unprofitable line of business.
Australian Prime Minister Anthony Albanese has urged insurers to process claims quickly and fairly :
Insurance companies need to do the right thing. They have a social licence, and people expect them to make payments in a speedy and effective way when they are due. This is a time where insurance companies can restore some of their reputation with the public by acting speedily, and we expect them to do so.
