Suncorp premiums for its reinsurance program for the new financial year have risen significantly as a result of the hardening global market, while the group is increasing its annual natural hazard allowance.

The company says it has successfully placed its reinsurance program in line with a strategy of achieving an “optimal balance between the cost of the program and acceptable levels of earnings and capital volatility”.

“While the overall structure of the program remains similar to prior years, changes have been made to reflect the material hardening of the global reinsurance market following elevated natural hazard activity in recent years,” it says in a statement to the Australian Securities Exchange today.

The maximum event retention has been maintained at $250 million with the upper limit increased from $6.5 billion to $6.8 billion, which covers the home, motor and commercial property portfolios across Australia and New Zealand. One prepaid reinstatement covers losses up to $6.8 billion and two further prepaid reinstatements cover losses up to $500 million.

In addition to the main program, the group has also purchased dropdown aggregate protection and has excess of loss cover, with protection kicking in after a higher retention.

“The aggregate excess of loss cover has also been renewed, with the attachment point increasing from $650 million to $850 million and the amount of cover provided remaining at $400 million,” it says. “Additionally, the per event deductible has increased from $5 million to $10 million.”

The insurer also say the hazards allowance is expected to increase to $1.16 billion from $960 million for fiscal 2022.

CEO Steve Johnston says the group dealt with 35 separate events and more than 120,000 natural hazard claims last financial year at an expected cost of around $1.1 billion, net of reinsurance recoveries. The total was in line with previous guidance and reflected the impact of a La Nina, he says.

Mr Johnston still expects the group’s fiscal 2023 underlying insurance trading ratio to be within the forecast 10-12% range, with the increased natural hazard allowance and reinsurance premiums being largely offset by higher investment yields, strong gross written premium growth and benefits from the strategic investment program.

Suncorp will report its results for the financial year ended June 30 on August 8.