The Insurance Council of Australia said more than 20,000 claims had been received relating to bushfires since November 8. The current estimated loss is $1.65 billion.
Assessors are still to get into some areas hit by the bushfires.
The hail storms that swept through Victoria, the ACT and NSW earlier this week have resulted in more than 55,600 claims, with an estimated value loss of $514 million. More than half of those claims are from Canberra, which was hit by a bushfire near the city’s airport two days later.
Combined, the insurance costs have gone past the impact of the Black Saturday fires that hit Victoria in 2009.
BIS Oxford Economics, in research released on Friday, said the impact of drought and fires on the agriculture sector alone would be up to 0.2 per cent of gross domestic product (GDP), or almost $4 billion.
With several months left in the national bushfire season, BIS said this year was the second worst on record in terms of residential property loss, with more than 2500 homes destroyed. Only the 1938-39 fires that devastated a string of towns across Victoria was worse.
There would also be a substantial impact on the tourism sector, with BIS chief economist Sarah Hunter saying the bushfires had hit at the worst possible time during the peak holiday period.
Dr Hunter said the economy would be weighed down by the fires’ impact until at least the start of the second half of this year, with a possible rebound due to reconstruction work into 2021.
But longer term, she said with governments focused on adaptation and mitigation, there would be a larger cost to be borne by all Australians.
Spending to protect communities from higher temperatures and climate change or to deliver ordinary services such as fresh water meant less would be spent on productivity-enhancing infrastructure and services.
Dr Hunter said ultimately, the living standards of all Australians would be affected.
“If you have to adapt and mitigate against climate change, your living standards will also then be lower than they otherwise would be,” she said.
By 2025, the cost in lower GDP per capita could be as much as $1000.
Mark Trevaskis is one of those in the tourism sector suffering because of the flow-on effect of the bushfires.
He and wife Fiona bought a property in the NSW Hunter Valley community of Cessnock last year to lease out through Airbnb. Everything had been going well until late last month as the bushfire threat grew.
Since then, however, potential visitors have all but dried up.
“The forward bookings have just collapsed. The fires are having a huge impact,” he said.
Mr Trevaskis said the impact was not just on the rental property. After visitors stay at the property, a cleaning company that employs casuals is called in.
“But without people coming through, we don’t have to call on the cleaner and that means there are casuals who aren’t getting work, so it’s rippling through different parts of the economy that aren’t directly affected by the fires,” he said.
National Australia Bank on Friday said it would give all its 30,000 permanent staff an extra day’s annual leave this year in a bid to encourage them to take a break in one of the bushfire-affected areas.
“By giving NAB employees an extra day’s leave, we hope to help businesses such as cafes, restaurants, tour operators, hotels and other accommodation providers to get back on their feet,” NAB chief executive Ross McEwan said.
Consumer confidence has fallen in the immediate wake of the fires, with several retailers reporting a drop in sales through the important Christmas-Boxing Day trading period.
UBS economists, who believe economic growth could be up to 0.25 per cent lower across both the December and March quarters, said there would be an indirect impact in the construction sector due to work days lost because of smoke. Shoppers were also likely to be hit with higher prices as the drought and fires hit production.
Westpac senior economist Justin Smirk said next week’s December-quarter consumer price index was likely to show beef, lamb and pork prices increasing by 2 per cent through the final three months of the year.
He said while fruit prices had been relatively stable through the quarter, market prices for vegetables had jumped 20 per cent, which would likely see a 4 per cent lift in retail prices.
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.