Suncorp says its catastrophe reinsurance program for this financial year comes at a lower cost after capacity returned to the market.

In line with last year, the insurer has arranged a maximum event retention of $350 million for a first large event.

Under the improved market conditions, it has raised the retention for a second large event to a maximum $350 million from $250 million.

CEO Steve Johnston says capacity “has increased significantly for main catastrophe covers and pricing has improved. For other types of cover, including aggregate covers, capacity remains limited and expensive.”

The main catastrophe program covers the home, motor and commercial property portfolios across Australia and New Zealand, giving Suncorp protection for losses between $500 million and $6.3 billion, and it includes one full prepaid reinstatement.

“The total cost of the FY26 catastrophe reinsurance program is expected to be lower than in FY25, reflecting strong reinsurance rate reductions and changes to the program, partially offset by exposure growth in the portfolio,” Suncorp said.

Group cover that reduced exposure to $350 million for a first and second event has been replaced with a structured, multi-year solution. The cover will include a profit-sharing mechanism and reinsurer losses will be capped at $600 million over a three-year term.

“The cost of the cover is lower than in FY25, with further expected upside from the profit-sharing arrangement,” Suncorp said.

Other minor changes have been made to the program structure to “optimise coverage”.

A second reinstatement of the $500 million to $1 billion main catastrophe program has been added to provide further resilience and reduce the risk of expensive reinstatement costs in the event of one or more large events.

“Secondly, the group dropdown limiting a second event to $250 million has not been renewed, given the inefficiency of this cover,” Suncorp said. “These changes will result in lower reinsurance premiums and largely offset in terms of earnings volatility risk.”