SYDNEY, AAP – Insurance Australia Group has raised its cost estimate for severe weather this financial year after storms and hail damaged several states last month.

IAG on Tuesday increased its natural peril claim costs forecast from $765 million to $1.04 billion, having already increased the allowance significantly on the prior year.

About 14,000 claims have been made from customers affected by the storms and hail which ravaged South Australia, Victoria and southeast Queensland last week.

Volunteers have been deployed from other states to help recovery efforts.

More claims are expected, but IAG’s cost for this event will be capped at $169 million. Reinsurers will cover the remainder.

Natural peril claim costs for the first four months of the financial year have exceeded expectations by $280 million.

IAG provides home and motor insurance across brands including CGU, NRMA and SGIC.

Shares on the ASX were down 6.51 per cent to $4.52 at 1135 AEDT.