Suncorp has reported a positive start to the year, with reinsurance protection for losses up to an increased $6.75 billion.
The overall cost of the Suncorp program is expected to be broadly in line with last year given offsetting changes.
The new protection limit remains above Australian and New Zealand regulatory requirements and compares with $6.4 billion last year.
Group CEO, Steve Johnston highlighted the return of stability in the insurance industry.
“It is pleasing to see stability return to global reinsurance markets after three years of disruption,” Johnston says.
“Reinsurance is a major input cost to the price of insurance products and this, along with broader economy-wide inflation, has driven up the cost of insurance premiums for customers in Australia and New Zealand.”
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Suncorp says program changes include not renewing a quota share agreement for the Queensland home portfolio due to the federal government’s cyclone reinsurance pool, and improved risk selection and pricing that have boosted resilience.
The company had previously ceded 30 per cent from the Queensland home insurance portfolio to reduce concentration risk in the region.
Suncorp maintains its maximum event retention of $350 million for a first large event and $250 million for a second, with the main catastrophe program covering the home, motor and commercial property portfolios across Australia and New Zealand.
In line with last year, group drop-down covers have also been purchased that reduce the second, third and fourth event retention to $250 million, and the Australian drop-down program continues to reduce retention for a third and fourth event to $150 million.
Suncorp’s natural hazard allowance for this financial year is expected to increase to $1.565 billion from $1.36 billion, with the actual perils experience for last year estimated at about $1.23 billion.
The increase reflects unit growth, inflationary pressures and increased risk retention resulting from reinsurance changes.