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Natural hazards cost Suncorp $568 million in first half 

Suncorp has estimated first-half natural hazard event costs at $568 million following six significant events, and has announced a $107 million reserve strengthening spread across several portfolios because of external challenges facing the industry. 

The natural perils total puts Suncorp on track to fall below the full-year allowance of $1.36 billion, as the half proved relatively benign until December. 

The costs include $212 million for east coast storms in December, $56 million for Cyclone Jasper and $51 for December hail and rain. The insurer will recover about $14 million in relation to Jasper as part of federal Cyclone Reinsurance Pool arrangements. 

In its own reinsurance program, the company has a maximum event retention of $350 million for the first event, plus additional cover for medium-sized events and a 30% quota share arrangement relating to the Queensland home portfolio. 

Suncorp says the $107 million pre-tax reserve strengthening results from a “broad series” of external challenges facing the industry.

“We have continued to see inflationary pressures from drivers such as supply chain capacity constraints and higher third-party settlements in motor, and water damage and large fires in our home portfolio,” Group CEO Steve Johnston said. 

In motor, a $56 million strengthening, offset by a $54 million release under accounting rules, was driven by higher repair costs and extended repair times due to the tail of covid-related supply chain issues, plus increased total loss claims. 

In home, water damage claims and an unusually high number of large fire claims late last financial year led to a $32 million reserve strengthening. Pricing has been updated in response to the claims. 

Natural hazards reserves were strengthened by $32 million after a Newcastle hailstorm last May, while commercial and personal injury experienced a net strengthening of $18 million mostly related to WA workers’ compensation. 

New Zealand strengthening totalled $24 million, driven by large developments on a small number of fire claims and severe weather events early last year. 

Suncorp has affirmed its full-year guidance for underlying margins and says the first-half result will be supported by gross written premium growth ahead of expectations. 

“We continue to closely manage insurance pricing to respond in line with input costs such as reinsurance and inflation on repairing homes and cars, while also being mindful of the affordability challenges facing our customers,” Mr Johnston said. “Pleasingly, in the first half we have seen more insurance customers choosing our home and motor products, with strong unit growth in both key portfolios.”