Australia flood costs to soar

LOSSES from the floods devastating Australia to the Lloyd’s of London market may run to hundreds of millions of Australian dollars, its chairman Lord Levene said yesterday.

Asked alongside Davos meetings to estimate the cost of the disaster, Levene said it could leave Lloyd’s underwriters with net losses, but said Lloyd's' total bill would not reach A$1bn (£630m).

With floodwaters still high in Queensland and Victoria states, losses are continuing to rise, but Levene played down the effect on insurers.

“As far as we’re concerned, the costs are all in the normal course of business,” he said in an interview.

UK insurers have been cagey to date about their level of exposure to the floods. In a trading update on Wednesday Hiscox, another Lloyd’s insurer and reinsurer that wrote £1.7bn in premiums last year, said its position on the floods “is still evolving, however we believe we are underweight in this area.”

Levene said he expected Lloyd’s 2010 results to be “OK” but “they won’t be brilliant.” The floods follow extensive losses to Lloyd’s insurers from the earthquake that hit New Zealand last September.