Suncorp flags higher home premiums on disaster and building costs

Suncorp says home insurance premiums are set to keep rising as a result of increasing claim costs due to wild weather and high inflation in the building sector, and it is putting through price rises in the “mid-teens”.

Brisbane-based Suncorp on Monday said profits for the year fell by a third, as earnings in its flagship insurance arm dropped sharply because of a wave of natural disaster claims, including from this year’s catastrophic floods.

As insurers continue to underestimate the cost of wild weather, Suncorp exceeded its allowance for natural disasters by $101 million, and said it would raise the allowance in the year ahead by $180 million to $1.16 billion.

As all insurers jack up premiums in response to rising costs, chief executive Steve Johnston told analysts Suncorp had been putting through “quite material” increases in home insurance premiums, highlighting higher reinsurance costs, inflation in building input costs, and shortages of tradespeople.

When asked by an analyst how rising insurance costs would affect affordability, Johnston acknowledged premiums had been rising sharply in recent years, but said the company was not seeing signs of consumers dumping insurance cover.

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“As an industry we are seeing obviously increase premiums coming through,” Johnson said. “In this environment, we have to reflect that that does put pressure on affordability.”

He said he was keeping a “very close eye” on the affordability, and said governments could help to address the issue by lowering taxes on insurance.

Johnston also said the company was putting through “high single-digit” price rises for motor insurance premiums, pointing to the surge in second-hand vehicle costs.