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Vero owner Suncorp New Zealand reports 20% gross written premium increase to $1.4 billion, CEO Jimmy Higgins is 'hopeful' customers won't see same level of premium increases in 2024

Insurance / news
Vero owner Suncorp New Zealand reports 20% gross written premium increase to $1.4 billion, CEO Jimmy Higgins is 'hopeful' customers won't see same level of premium increases in 2024

Insurance giant Suncorp New Zealand’s gross written premium jumped even higher than that of its insurance rival IAG over the six months ending December 2023, soaring up by almost 20% to $1.4 billion.

Its CEO says the insurer doesn’t want to see that level of gross written premium growth that customers experienced last year flow through into the rest of 2024. Gross written premium is the total amount of money customers are required to pay for insurance coverage on policies issued by an insurer.

Suncorp NZ reported a net profit of $94 million in its half-year results on Monday, an increase of 3.3%.

Suncorp NZ’s general insurance (GI) profit after tax was up 6.7% to $80 million but its life insurance profit fell 12.5% to $14 million.

The insurer says the life insurance decrease was due to “discount rate impacts and modest net unfavourable experience”.

Suncorp is both Australia and New Zealand’s second largest insurer and holds more than a quarter of Australia's general insurance market. It has the Vero and Asteron Life brands and the joint venture AA Insurance business in NZ.

The insurer says Vero Insurance has paid out more than 90% of claims paid out to customers from the 2023 North Island flooding and Cyclone Gabrielle events.

Suncorp says its New Zealand division benefitted from a “relatively benign weather period” over the six months ending December 2023 with no natural hazard events denting the group’s allotted allowance.

Australia on the other hand was impacted by six significant weather events which occurred through November and December, Suncorp says, which resulted in the group managing around 45,000 natural hazard claims during the first half of its 2024 financial year.

“The total cost of natural hazard events was $568 million, $112 million below the group’s allowance in the half,” says the company’s statement to the Australian Securities Exchange.

Higgins says the NZ division still has customers who were badly impacted by the major weather events experienced in New Zealand last year that don’t have clarity around the land categorisation of their properties. 

Auckland Council confirmed last year it would provide financial support to Category 2P homeowners in order to reduce risk to life at their properties while both Auckland Council and the Government have agreed to share the cost of Category 3 property buy-outs.

“We have a small number of customers that don’t know yet whether they’ll be bought out or not. While we’re supporting those customers, until Auckland Council provides them with certainty, they are reluctant to settle their claims,” Higgins says.

Reinsurance appetite

Higgins says Suncorp needs to see how reinsurers respond to recent events outside of NZ and observe if reinsurers’ risk appetite and pricing for New Zealand natural hazards has changed – particularly after last year.

“This guidance, coupled with local supply chain inflationary pressures should provide an early signal on the impact to premiums in 2024,” he says.

“I am hopeful we won’t see the level of premium increases our customers experienced in 2023.”

Group CEO Steve Johnston says the “strong” premium growth in Suncorp’s Australian and New Zealand general insurance businesses during the first half of the 2024 financial year was reflective of “targeted price increases in response to higher reinsurance costs, ongoing supply chain inflationary pressures resulting in higher repair costs for cars and homes, and an elevated level of natural hazards”. 

“We remain acutely alert to the affordability challenges facing customers and continue to focus on driving greater efficiencies in our own business. We are vocal advocates of policy reform and mitigation investment that helps reduce the risk of extreme weather to people and communities, which are critical in reducing insurance premiums for consumers, particularly in high-risk locations,” he says.

Suncorp NZ’s net incurred claims costs of $620 million increased by 6.9% over the six months ended December 2023 and was driven by inflationary pressures and customer growth.

Total expenses rose 10.4% to $309 million, impacted by growth related costs and commissions.

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What a time to sell insurance. Just a few big fish left in a very small pond after years of industry consolidation.