Claims from the bad weather increased 50 percent, resulting in the general insurance profit dropping 56 percent to $65m. Photo: 123RF
Australian insurer Suncorp's New Zealand full-year profit fell 30 percent as claims from the North Island floods and Cyclone Gabrielle added to rising reinsurance costs and inflation.
The company, which operates the AA and Vero general insurance brands and Asteron Life, had a net profit of $115 million for the year ended June.
Claims from the bad weather increased 50 percent, resulting in the general insurance profit dropping 56 percent to $65m. This was partly offset by Asteron profit more than tripling to $50m, with 25 percent rise in new business.
Chief executive Jimmy Higgins said the diversity of its business enabled it to deliver a good result despite challenging and uncertain times.
"Suncorp maintains a strong reinsurance program and good capitalisation, which has helped the business support customers, particularly through the events of the past six months."
He said it had settled about 66 percent of the 32,000 flood and cyclone claims, but decisions on other claims were being delayed in part by the need for official decisions on what properties would never be rebuilt.
Higgins said the gross cost of the bad weather had been well above $1 billion, more than the Kaikōura earthquake, but reinsurance cover had reduced the net cost to Suncorp to $75m.
However, the large reinsurance companies - which provide the back up insurance cover for insurance companies - have changed their view of how risky New Zealand is.
"Prior to 2023, New Zealand was seen by global reinsurers as having earthquake risk, with flood and cyclone risk here not fully understood. Following these events, reinsurers no longer see New Zealand as low risk."
Higgins said the reinsurers now needed to revise their risk models for New Zealand, which inevitably meant higher prices for the cover and higher premiums for consumers.
He said there was a national collective responsibility to improve the resilience of communities.
"We need to develop a coordinated and united response to where and how we build; how we protect our communities, what the national community resilience plan is and what is the long-term investment strategy the government has on infrastructure."