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Quake claims hit 1700, but only 'handful' significant

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Insurers have received 1700 claims from multiple states a day after Victoria’s largest earthquake on record, but only a handful of significant structural claims have been lodged so far, the Insurance Council of Australia (ICA) says, and insurers do not expect to incur major costs.

The early total is made up almost entirely of home building claims for minor damage such as fallen cornices and damage to plaster and render, ICA says. Of the 1700, 96% are from Victoria and 4% from the ACT and NSW.

Home, commercial property and business interruption insurance policies generally cover damage caused by an earthquake.

While too early to accurately estimate potential costs, Suncorp CEO Steve Johnston says the quake is unlikely to trigger major cover and the insurer had received only a relatively small number of claims by this morning across its brands, including AAMI, Apia and GIO.

“We don’t expect it to be a big event from an insurance perspective but it’s a timely reminder of the value of the product we offer and the peace of mind it provides,” Mr Johnston said today at Suncorp’s virtual annual general meeting.

An Allianz spokeswoman told insuranceNEWS.com.au the insurer has received around 300 claims with losses of about $5 million from a very wide geographical area, including SA and NSW, as well as Victoria.

At IAG, 435 claims had been received by 9am today across its brands, which span NRMA Insurance, CGU, SGIO, SGIC, Swann Insurance and WFI in Australia.

IAG expects to continue to receive a mixture of personal and commercial claims as customers identify damage to their property. COVID restrictions may result in it taking longer than usual for commercial customers to identify damage as many buildings are unoccupied due to lockdowns and won’t be inspected as quickly as they otherwise would.

Charles Taylor National Property Manager and Executive Adjuster Gary Pahl, who is based in Melbourne, says a number of primarily commercial building claims have come through to the loss adjuster already, with “highly obvious, in your face damage”.

Charles Taylor engineers are already receiving an uptick in work from the earthquake. Its building inspections conducted after the quake revealed some significant cracking, as well as frequent hairline, aesthetic cracking. Each site visit evaluates whether the cracking preexisted, what is new and what has worsened.

“We are looking at all of that at this stage,” Mr Pahl told insuranceNEWS.com.au. “Seasonal movement does result in cracking and we have to differentiate between that and new or more severe damage that is caused by this event.”

In one case, a solid marble angel at a church in Melbourne’s west - in situ since 1908 - fell and caused significant damage, leaving the building with visible cracking.

“It is very clear that is earthquake related. That is the sort of claim we are seeing now. It is highly visible, very obvious, with make safe work required.”

Though the earthquake’s epicentre was in the state’s east, the Melbourne CBD might not have widespread or serious damage, while buildings on the west of the city failed.

"We need to get an understanding as to how this impacted the properties around Melbourne,” he said.

The quake, measuring 5.9 on the Richter scale, hit Wednesday shortly after 9am, with the epicentre at Victoria’s Mansfield around 40 kilometres south of Mount Buller, 130km from Melbourne and 300km from Canberra.

The tremor was felt across Bass Strait in north-west Tasmania, and in parts of SA, the ACT and NSW. Buildings in Melbourne’s inner city were damaged and there were power outages and interruptions to public transport.

Insurance assessors are considered authorised workers and are permitted to conduct damage assessments under current COVID restrictions. Builders and tradespeople are also permitted to conduct urgent and essential repairs, including property make-safes.

MIE Australia Engineer Deniz Bekir said in a note on LinkedIn that his experience after WA’s Kalgoorlie/Boulder earthquake in 2010 and a 2012 quake in Moe, Victoria, indicates “trying times ahead in dissecting earthquake claimed damage and preexisiting for insurers”.

“It will be interesting to see the extent and reach of earthquake claims from the epicentre north east of Melbourne as recorded and felt as far as Canberra and up to Sydney.”

A briefing note from Risk Frontiers Chief Geoscientist Paul Somerville says “moderate” shaking with very light damage potential occurred on the northeastern outskirts of Melbourne, and “light shaking with no damage potential" occurred in Melbourne.

“This map is consistent with the low level of damage that has been reported to date,” he said. “The occurrence of some nonstructural damage in Melbourne probably indicates that the affected structures were very weak.”

Wednesday’s quake appeared to be primarily caused by stresses generated by the collision of the Pacific Plate with the Australian plate along plate boundary faults that run through New Zealand.

The quake is likely to be a long tail event, Charles Taylor's Mr Pahl says, and it will take time to better understand how it impacted different regions.

“It will carry on for a while. It certainly isn’t a Christchurch, it is nothing like that, but it was still a significant event.”