In a note to investors, a J.P. Morgan analyst said losses to theinsurance industry due to extreme flooding in Australia stand at anestimated $1 billion.

Analyst Siddharth Parameswaran said the prediction was“extremely preliminary.”

The Insurance Council of Australia (ICA), which has declared acatastrophe in the state of Queensland, said flooding accounts forone-third of natural hazard damage in the country. However,residential flood coverage in Australia varies depending on theinsurer and the area. The ICA said it was too early to provide aloss estimate.

According to modeler AIRWorldwide, the additional premium for flood coverage is minimal inmany areas and penetration can be high, but in flood-prone areasdeductibles are as high as 50 percent. The coverage is included inmany commercial policies.

Initial reports and statements indicate Queensland-based insurerSunCorp may be hit the hardest. The company told the AustralianStock Exchange it has received 1,800 claims.

Insurance Australia Group has said it has received about 600claims.

QBE Insurance could not immediately be reached for comment.Stock prices of each company have fallen due to concerns related topotential flood claims.

Rain that began Dec. 25 and ended Jan. 3 has flooded about347,490 square miles and affected more than 20 towns and 200,000residents. Hundreds of roads have been closed. AIR said coalproduction in Queensland, the country's top producing coal state,has been severely disrupted. The Queensland Resources Council saidlost coal and gas production would run to hundreds of millions ofdollars.

Economists have said about $6 billion will be lost from reducedexport volumes.

Crops may also be significantly affected by the flood waters,but the Queensland Farmers Federations said few farmers have floodinsurance. The floods have severely disrupted the planting andharvesting of key crops such as cotton, sunflower, sugar, wheat andbarley. Early estimates by farming lobby group AgForce suggest croplosses alone could exceed $1 billion, according to GuyCarpenter.

The insurance industry in Australia is working on developinggreater access to flood insurance, according to the ICA. Legacyland-use decisions and a lack of flood maps have contributed to ageneral availability problem.