Suncorp Enhances Reinsurance in Stable Market

3

Group CEO Steve Johnston expressed satisfaction with the rebalancing of global reinsurance markets after several tumultuous years. "Reinsurance significantly influences the pricing of our insurance products," said Johnston. "Alongside inflation impacting the broader economy, this has contributed to higher insurance premiums in both Australia and New Zealand."

This new protection ceiling exceeds the regulations set by Australian and New Zealand authorities, marking an increase from last year’s $6.4 billion limit.

Noteworthy adjustments in Suncorp's program involve the non-renewal of a quota share agreement for Queensland’s home insurance, attributable to the federal government’s cyclone reinsurance pool. Innovations in risk selection and pricing have notably enhanced resilience. Prior to this, Suncorp had transferred 30% of its Queensland home portfolio to mitigate regional risk concentration.

The company maintains a maximum event retention of $350 million for an initial large-scale event and $250 million for subsequent incidents. The central catastrophe program encompasses home, motor, and commercial properties across both Australia and New Zealand.

Mirroring the previous year, the group has procured drop-down covers to lessen retention costs for the second, third, and fourth events to $250 million. Additionally, the Australian drop-down arrangement still reduces retention for the third and fourth events to $150 million.

New Zealand’s increased retention denotes ongoing ramifications of early last year’s severe weather on reinsurance economics and availability in the region.

Furthermore, full placement of buy-down cover, which includes a prepaid reinstatement, is secured to offer protection between $NZ200 million ($182 million) up to the group’s maximum retention. This is an upgrade from last year’s partial placement of 52% with an attachment point at $NZ100 million ($91 million).

With the anticipated completion of Suncorp’s bank sale on July 31, Johnston commented, "Our renewed reinsurance program places us in a strategic position to evaluate additional covers that may be beneficial."

Suncorp forecasts an increase in its natural hazard allowance to $1.565 billion this fiscal year, from last year’s $1.36 billion, with previous year’s perils costing approximately $1.23 billion. This hike reflects growth in unit numbers, inflation, and enhanced risk retention due to reinsurance modifications.

The insurer remains committed to incorporating its reinsurance costs and natural hazards allowance into the pricing of insurance policies, aiming to sustain its insurance margin within a range of 10%-12%.

Expected to be released on August 19, Suncorp projects its underlying margins for the last financial year to settle around the midpoint of the 10%-12% range. A late-December weather incident drove reserve fortifications for the second half of the year, influenced by supply chain issues and holiday timing affecting claim submissions, altering typical claim patterns and durations.

Published:Wednesday, 31st Jul 2024
Source: Paige Estritori

Share this news item:

Insurance News

Clear

AFCA Upholds Insurer's Decision on Claimant's Non-Disclosure 12 Jun 2025: Paige Estritori A recent ruling by the Australian Financial Complaints Authority (AFCA) supported Auto & General's decision to deny a motor policyholder's claim after a crash. The decision stemmed from the policyholder's failure to disclose a driving-related good behaviour bond, despite his claims of a learning disability affecting his understanding of the policy's inquiries. - read more

Insurer Ordered to Cover Restaurant Arson Despite Director's Unrevealed Criminal Record 12 Jun 2025: Paige Estritori In a recent decision, the Australian Financial Complaints Authority (AFCA) directed insurer QBE to honour an arson claim for a restaurant, despite the owner's failure to disclose prior criminal convictions during the policy's inception. The restaurant, which operates from a leased location, suffered extensive damage due to an arson attack on August 2 of last year, halting its business operations. While the arsonist was apprehended, QBE initially denied the claim, citing non-disclosure of the director's criminal history. - read more

Insurance Sector Reports $1 Billion Profit Amidst Household Strain 11 Jun 2025: Paige Estritori The insurance industry secured a net profit after tax of $1.11 billion in the March quarter, with major contributions from insurers at $990 million and reinsurers at $123 million, as revealed by the latest data from the Australian Prudential Regulation Authority. The insurance service result, a key indicator of underwriting success, reached $1.32 billion during this period, while investment returns added an impressive $1.18 billion. - read more

ASIC Accuses Choosi Pty Ltd of Misleading Insurance Comparison Practices 10 Jun 2025: Paige Estritori The Australian Securities and Investments Commission (ASIC) has initiated legal proceedings against Choosi Pty Ltd, alleging deceptive practices in its insurance comparison service. The regulatory body charges that from July 2019 to June 2025, Choosi misrepresented its offerings, claiming to compare funeral and life insurance policies from multiple insurers while actually only comparing products from a single provider, Hannover Life Re of Australasia Ltd. - read more

Individual Disability Income Insurance Extends Profitable Streak into Fifth Quarter 10 Jun 2025: Paige Estritori Recent figures from the Australian Prudential Regulation Authority reveal that individual disability income insurance (DII) recorded an underwriting profit of $231 million for the first quarter of 2025, continuing a five-quarter streak of profitability. This performance shows promising growth compared to the December 2023 quarter, which saw an $86 million loss. Although the latest profit is up from $138 million in the last quarter, it still falls short of the $419 million achieved a year before. - read more