The cyclone reinsurance pool can meet future claims obligations despite recording unexpected deficits last financial year, its administrator says.

The program had a negative operating result of $1.21 billion and an underwriting loss of $1.26 billion, according to the Australian Reinsurance Pool Corporation’s scheme report and outlook.

The corporation originally projected an operating surplus of $27 million and positive underwriting result of $4 million.

“A negative operating result is a possible outcome in any period, as the pool’s operating result and accumulated position are expected to vary from year to year driven by the volatility of cyclone events,” the report says.

“Cash flow modelling shows that the cyclone pool can fund claim payments from events occurred to date from assets currently held and future premiums.”

The report says the 2024-25 result reflects the impact of Ex-Tropical Cyclone Alfred. As of June, Alfred’s estimated incurred cost was $1.86 billion, with a reported average claim size of $8000.

“TC Alfred is the biggest loss event for the cyclone pool to date. The average claim size is likely to increase materially given that many cost assessments have not been completed.

“As more claims are settled, we will analyse claims and other information from the event to determine what can be learnt about cyclone risk, building stock vulnerability and insurer practices.

“Insights from this analysis will inform the operation of the cyclone pool and may be shared with external stakeholders.”

The corporation forecasts the pool will return an operating surplus of $26 million and earned premium will rise 4% to $657 million this financial year.

“The premium is expected to increase in line with sum insured inflation and growth in reinsured properties,” the report says.