No loyalty tax on our customers, Suncorp chief says
Suncorp customers are not charged a “loyalty tax” for staying with the insurer, CEO Steve Johnston said today in response to a shareholder question on affordability.
“The sources of pricing that we attribute to a home insurance premium, or any insurance premium, are the underlying risk factors that emerge in the writing of that policy ... We don’t provide a loyalty tax,” he told this morning’s annual general meeting in Brisbane.
Mr Johnston was responding to an Australian Shareholders’ Association representative who said the industry has a reputation for “loyal retail customers” being quoted “much higher prices than new customers. Not only does this make affordability worse, it creates extra customer service and churn costs … What is Suncorp doing to eliminate loyalty premiums across the industry?”
Last month, Slater & Gordon said it was weighing a class action against Suncorp on behalf of customers who may have been charged more for staying with the insurer.
Suncorp today reiterated that mitigation efforts and tax reforms hold the key to easing insurance cost pressures, especially for residents with elevated catastrophe risk exposure.
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“As I have said many times, we know the best way to reduce the premiums we all pay is to reduce the risk of a claim in the first place,” Mr Johnston said. “Unfortunately, too many people across our communities have built homes where they should never have been allowed to build. At the same time, as a society, we haven’t invested enough in resilience and mitigation projects that reduce risk.”
He says insurers, including Suncorp, are becoming more granular with risk pricing.
“We are able now to identify a number of different perils that go into a home insurance premium … So obviously flood risk is one of those [and] various working claim perils like burglary and other risks, but we can model very clearly now the impact on an insurance premium of natural hazard costs.”
Mr Johnston says insurance taxes mean customers with higher risk exposure pay more.
“We’ve consistently, as an industry, been making the point that it is regressive to be imposing taxes of this nature on home insurance, and to reform the tax system would be a fantastic initiative for improving affordability of insurance right across the board.”