he decade-long arrangement had split the risks and rewards of the insurer’s exposure to weather in Queensland, covering 30 per cent of its home policies.
Says better risk selection and federal cyclone program have replaced the deal.a deal with Warren Buffett’s Berkshire HathawayThe move was detailed on Friday as Brisbane-headquartered Suncorp, whose brands include AAMI and GIO, also said major natural disasters had a smaller impact than it had expected. However, the cost of some older claims had jumped.Suncorp has stuck with targets of underlying margins hitting about 11 per cent for the 12 months to June 30. Suncorp shares were down 2c to $16.
The cyclone reinsurance pool came under scrutiny last December because much of the damage incurred fell outside the pool’s rules for qualifying damage, meaning insurers were stuck with repair costs. Suncorp chief executive Steve Johnston told investors the global reinsurance market was stabilising after three years of rapid price jumps. “Reinsurance is a major input cost to the price of insurance products, and this, along with broader economy-wide inflation, have driven up the cost of insurance premiums,” he said in a statement.
The company said that natural hazards had likely cost $1.23 billion for the year to June 30, lower than its budgeted allowance of $1.36 billion. This reflects a trend seen elsewhere in the sector, such as Sydney-based rival IAG sayingOne wrinkle was a boost to reserves to pay for claims that struck in the first six months of the past financial year. This was primarily in December, when Queensland was hit with cyclones in the north and severe storms in the south.
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