Australian insurer Suncorp has reported a cost of between AUD 350 million (USD 225m) to AUD 410 million (USD 265m) from five natural hazard events across Australia and New Zealand during the opening quarter of this financial year, suggesting the erosion of some of its aggregate deductible.
From July 1st, 2022 to October 31st, 2022, Suncorp has received more than 13,000 claims from five declared natural catastrophe events across the two countries.
For the carrier, the most expensive of these events looks set to be the Victoria rains and floods in October at a cost of AUD 180 million (USD 116m) to AUD 220 million (USD 142m). Another rain and flood event in October which hit the New South Wales area and Victoria, is expected to drive losses of between AUD 40 million (USD 26m) and AUD 60 million (USD 39m).
However, Suncorp notes that for these events the extent of damage is still unfolding with flood peaks still to be reached in some parts of regional NSW, suggesting the cost could change for Suncorp as more claims come in.
Earlier in the quarter, the Sydney East Coast low in July has been pegged at a cost of AUD 90 million (USD 58m) for Suncorp; Southern Australia winds and storms in August at a cost of AUD 20 million (USD 13m); and the New Zealand North Island and top of South Island storm also at a cost of AUD 20 million (USD 13m).
Additionally, Suncorp has reported other natural hazard attritional claims, so less than AUD 10 million, of AUD 120 million (USD 78m) for the period.
At the mid-year reinsurance renewals, Suncorp made some adjustments to its FY23 placement in light of material hardening, which included changes to its aggregate excess of loss protection.
The firm raised the attachment point from AUD 650 million (USD 420m) to AUD 850 million (USD 550m), with the level of coverage remaining at AUD 400 million (USD 259m). Suncorp also elected to raise the per event deductible to AUD 10 million (USD 7m) from the previous AUD 5 million (USD 3m).
So, at the lower end of the firm’s natural hazard range for the first quarter of this financial year, events in the period would have eroded a little more than 41% of its aggregate deductible, with the upper end resulting in a more than 48% erosion.
The company’s main catastrophe reinsurance programme has an upper limit of AUD 6.8 billion (USD 4.4bn) with an overall maximum retention of AUD 250 million (USD 162m). The main programme also has dropdown aggregate protection.
So, if the cost of any of these event increases to more than AUD 250 million, the losses would be picked up by the insurer’s main catastrophe programme.
The insurer has said today that the full limits remain available on all of the group’s reinsurance covers.
All in all, the insurer’s natural hazard allowance for FY23 is AUD 1.16 billion (USD 750m).
Suncorp Group Chief Executive Officer (CEO), Steve Johnston, commented: “Our Customer Support Teams and assessors have been deployed to the hardest-hit areas of Maribyrnong, Rochester and Shepperton to provide on-the-ground support to our impacted customers.
“We’ve received approximately 4,600 claims off the back of these events in October and continue to urge those that can do so to lodge their claim online so we can get the recovery process underway as quickly as possible.
“Our current priority is assessing the damage, scoping out the works needed and starting repairs as quickly as we can. With some communities still hard to access, we are also using digital platforms and virtual assessment technology where we can, to proactively assist customers.”
