Suncorp has hiked its home insurance premiums by almost 10 per cent on average after payouts from devastating floods weighed on its profits.
Australia’s second largest home insurer – which owns brands like AAMI and APIA – revealed the price rise in a release to investors on Monday, alongside a 4.9 per cent increase in average car insurance premiums.
It blamed “higher natural hazard and reinsurance costs” for the steep hike in home insurance prices over the six months ended June 2022.
Natural disaster payouts, namely from widespread flooding across the east coast of Australia, were about $101 million higher than expected.
And Suncorp has increased its allowance for such payouts next year, expecting an additional $79 million in damages will be claimed as the nation suffers through weather patterns exacerbated by climate change.
The company still posted a $681 million net profit for financial year 2022, though this was 34.1 per cent lower than the prior year.
“While the group’s extensive modelling of catastrophe risk indicates only a minor upward trend in the frequency of natural hazard related events, more recent years have been adversely affected by the prevalence of the La Nina related weather pattern,” Suncorp told investors.
“The group has noted current modelling pointing to the likelihood of a third consecutive La Nina year.”
The jump in home and car insurance premiums is just the latest cost of living pressure to hit households amid the highest inflation in decades.
And because the figures are averages, premium hikes are likely to be far higher in areas directly affected by recent flooding in northern NSW and southern Queensland.
Experts have warned that those areas are fast becoming uninsurable as more common and severe flooding ruptures riverside communities.
Suncorp Group chief executive Steve Johnston also reiterated the company’s support for a $4.9 billion sale of its banking arm to giant ANZ Bank.
The deal is still pending approval from the competition watchdog.
“Our insurance strategy is delivering and once the sale process is complete we will be able to do more, and faster,” he told investors.
