AA Insurance annual premiums rise 22%, while profit surges nearly 186%

Insurance / news

AA Insurance reports $864.4 million in premiums for 2024, with annual profit nearly tripling to $108.2 million

18th Oct 24, 2:06pm by Ella Somers

AA Insurance received $864.4 million in insurance premiums during its 2024 financial year, a 22% increase from the prior period.

The insurer made an extra $157.7 million from insurance premiums in its June 2024 year, up from $706.7 million in its 2023 year. Premiums are the total amount of money customers are required to pay for insurance coverage on policies issued by an insurer.

AA Insurance paid out $686.9 million in claims, up 3.3% from the previous year.

AA Insurance released its June-2024 financial statements to the Companies Register on Thursday where it reported an annual profit of $108.2 million. That's up by almost 186%, or $70.4 million, compared to 2023.

It made $854.3 million in insurance revenue, a 21% increase from the prior year.

It also paid out $85.3 million in reinsurance premiums, an almost 40% increase from the $61.2 million paid for reinsurance premiums in 2023.

AA Insurance is a joint venture between the New Zealand Automobile Association (NZAA) and Vero Insurance. Vero is owned by Suncorp which is the second largest general insurer across Australia and NZ.

AA Insurance provides home, contents, car and commercial small business insurance. The insurer has over 500,000 customers who have more than one million insurance policies.

AA Insurance was fined by the Financial Markets Authority (FMA) earlier in October for overcharging thousands of customers more than $11 million.

AA Insurance was found to have failed to apply multi-policy and membership discounts and guaranteed no claims bonuses as well as misleading its customers in marketing material about the insurer’s multi-policy discount offer.

The insurer was ordered to pay a penalty of almost $6.2 million.

The FMA filed civil proceedings in the High Court at Auckland in June 2023.

Suncorp NZ reported its annual results for the June-2024 year back in August, showing the insurer made $2.8 billion from insurance premiums.

It reported a net profit of $230 million in the June-2024 period – double what it reported in its full 2023 financial results.

Suncorp NZ covers approximately 850,000 households and $590 billion of assets across New Zealand.

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29 Comments

by interesting1234 | 18th Oct 24, 2:38pm 1729215500

22% increase in profit from higher premiums alone? Is this separate from total net profit? They're loving these new climate models aren't they, the perfect excuse to keep cranking premiums for the commoners.

by middleman1 | 18th Oct 24, 4:48pm 1729223337

I1234. Be a bit careful there. You can be excommunicated these days for expressing doubts about the veracity of climate models.

by interesting1234 | 19th Oct 24, 7:35am 1729276523

I know, and while i’m not denying climate change, and understand the need and utility of these models, i cant help but wonder how long the masses will tolerate the core price increases. It cost me $900 for my WOF recently and i was astounded at the cost of parts now given i can fix many things myself.

by hotwired | 18th Oct 24, 2:56pm 1729216606

Yip keep touching your toes.

by sammnz | 18th Oct 24, 2:59pm 1729216742

Industries like these need to be forced to cap earnings, the point of insurance is everyone pays some to cover the unfortunate, shouldn't really be for profit.

by ChrisOfNoFame | 18th Oct 24, 3:19pm 1729217992

Or we can do as other countries have done and buy our insurance through our mutual insurers (i.e. non-profits) so they keep the for-profit insurers in check?

So how many mutual insurers are left in NZ? ... [silence]

... But don't feel bad. The dumb Australians privatized theirs too.

Who knows, maybe when we get a real government, for-the-people and only-for-the-people, they'll set up a non-profit insurer to kick some market ass. Then we'll know what real competition looks like. And then we'll also see how hollow the lies about how 'private businesses' are so much more efficient than public ones are too.

(I wonder how many Kiwis even know what 'mutuals' are?)

by Harry B | 18th Oct 24, 4:28pm 1729222098

FMG is a New Zealand mutual insurance company trading under its own act of parliament

They also increased premiums massively as well and also announced a record profit about $100 million

All the insurers seem to have made record profits this past year

Us kiwis are being fleeced by supermarkets, building suppliers , Banks and insurance companies

Cant see any politicians around with a will to fix things

by middleman1 | 18th Oct 24, 4:46pm 1729223174

Harry. Suggest have a look at how much of its gross exposure FMG actually underwrites with its own capital when considering if it is a ‘true’ Kiwi mutual.

by middleman1 | 18th Oct 24, 4:36pm 1729222579

CoNF. Govt appointed board deploying capital more effectively than private competitors in one of the worlds higher natural risk markets where scale, reinsurance buying muscle and legacy data are mission critical, is a pipe dream. Youi tried the start up game in NZ and crashed. Attempting to revive the corpse of State Insurance would go the same way.

by ChrisOfNoFame | 18th Oct 24, 7:51pm 1729234277

Middleman,

(Please, next time you post, after all the editing and re-editing, please help by removing all the spaces at the end of your edited text. Ed, a simple bit of javascript would make such requests unnecessary.)

Your opinion is noted. But mutuals are not, in almost all situations, run by governments.

However, given the massive capital requirements to challenge what successive govts have allowed to become 'the market', only government is likely to have a large enough balance sheet to allow mutuals to compete with the oligopoly that currently exists.

by ChrisOfNoFame | 18th Oct 24, 3:05pm 1729217108

There's going to be a whole lot of uninsured cars on our roads soon ... (Many countries have compulsory 3rd party insurance. NZ doesn't.)

I think I'll leave my car in the garage ... I'll be using public transport instead.

by Zachary Smith | 18th Oct 24, 3:51pm 1729219874

I'm sure you don't mean that. Anyway, it doesn't matter if the other party is not insured as long as you are fully insured. For the "middle-class" it's just the cost of motoring.

Also, people, please don't rely on third party insurance. I have been hit three times in the past five years, causing minor damage, and the offenders refused to give their details or just drove off. Damage not being visible doesn't mean there isn't any. My bumper looked fine but was loose and the brackets holding it on were crushed in one case. None of them appeared to be locals if you know what I mean. I'm not sure insurance is a thing in other countries but you cannot rely on others doing the honourable thing. Just my anecdotal experience.

by ChrisOfNoFame | 18th Oct 24, 7:55pm 1729234534

"I'm sure you don't mean that."

Um. No. I meant every word.

"Anyway, it doesn't matter if the other party is not insured as long as you are fully insured."

Methinks you don't understand that insurances companies suing uninsured people to recover losses, i.e. people who have almost nothing, doesn't work well.

by Zachary Smith | 19th Oct 24, 12:48pm 1729295293

Methinks you don't understand what high premiums are used for.

by Nifty1 | 18th Oct 24, 4:32pm 1729222342

"I get it.

You are so "wealthy and sorted" you..." own a home, that has a garage & you own a car. You have the choice to drive or take public transport.

Sound familiar Chris?

by ChrisOfNoFame | 18th Oct 24, 8:02pm 1729234974

It does indeed sound familiar.

When many people can't afford insurance, the insurance market contracts.

It is a clear economic indicator of a country heading to 3rd world status.

(Not sure if you were having nasty swipe at me. But hey. If it was, it backfired.)

by 1689 Baptist | 18th Oct 24, 6:30pm 1729229403

I have stopped my insurance. I have made the decision that based off the belief that the biggest cost I risk is writing off someone's tesla. It is more cost effective to pay for this against equity than insurance in my situation.

by maninavan | 19th Oct 24, 8:21am 1729279315

Australia has "compulsory third party insurance", it's included in the rego, about 350 a year for the CTP component for a standard car, it doesn't cover any property damage, you need third party insurance on top of CTP for that. You have a few options for CTP and they all cost the same.

by JimboJones | 18th Oct 24, 3:09pm 1729217375

Insurance deflation is coming...

by ChrisOfNoFame | 18th Oct 24, 3:19pm 1729217952

Not before the number of uninsured rises substantially.

But don't worry - this government will suddenly think compulsory 3rd party insurance is a 'first-world' thing and the private profits will be sustained.

by FCM | 18th Oct 24, 3:30pm 1729218614

Que Winston and Co did'nt they moot the idea of a government run insurance company, maybe the next election cycle.

by JimboJones | 18th Oct 24, 4:02pm 1729220571

Please no!

by tryagain | 19th Oct 24, 6:51am 1729273906

That was before their ship sank

by AN Other | 18th Oct 24, 3:44pm 1729219446

AA Insurance was fined by the Financial Markets Authority (FMA) earlier in October for overcharging thousands of customers more than $11 million.

AA Insurance was found to have failed to apply multi-policy and membership discounts and guaranteed no claims bonuses as well as misleading its customers in marketing material about the insurer’s multi-policy discount offer.

The insurer was ordered to pay a penalty of almost $6.2 million.

Does AA Insurance have to pay their customers back the overcharged amounts? If not, that's a sweet $4.8M gain right there.

by JimboJones | 18th Oct 24, 4:03pm 1729220594

They already have

by Chaosinflesh | 18th Oct 24, 8:06pm 1729235185

If you pay cash, insurance is optional. Just saying.

by tryagain | 19th Oct 24, 6:50am 1729273830

Got a quote for house and contents from them.Nearly double what I am paying at the moment. Same for a car quote. I guess peoples loyalty willbe running out about now.

by maninavan | 19th Oct 24, 8:24am 1729279498

This was my experience in 2017. Double the price, worse cover. After years of price increases my insurance is still a decent bit lower in 2024 than AA was in 2017.

by Timutei | 19th Oct 24, 4:01pm 1729306900

Switched all of our policies to AA from TradeMe Tower. Saved about $1000.