With natural hazard costs rising sharply to AU$1.319 billion in H1 2026, Suncorp executives have indicated the group may revisit its use of additional protections, including the potential purchase of a new aggregate reinsurance treaty, amid increasingly favourable conditions in the softening reinsurance market.
Alongside the group’s H1 2026 results released earlier today, Suncorp CEO Steve Johnston said the insurer responded to nine declared natural hazard events during the half, resulting in more than 71,000 claims.
“The destructive thunderstorms and widespread hailstorms that hit the east coast of Australia, particularly south-east Queensland through October and November, contributed to the majority of claims received over the half, with the giant hailstorm event in November likely to be among our costliest in recent history,” Johnston explained.
He added that while Suncorp’s H1 2026 reported profits and shareholder returns were pressured by elevated natural hazard costs and lower investment income, the underlying business remains resilient, continuing to deliver on its strategic priorities and building solid momentum.
Readers may recall that at its 2026 reinsurance renewal, Suncorp secured core catastrophe protection covering losses from $500 million to $6.3 billion, while also arranging a structured, multi-year solution that lowers its retention to $350 million for both the first and second events.
Thus, the $1.319 billion of natural hazard costs in H1 2026 took the insurer $453 million over its budget.
With reinsurance pricing and terms easing in recent years, Suncorp executives said during the firm’s recent earnings call that aggregate cover could once again be viable at the next renewal.
Without aggregate protection to cap losses at budget, the insurer remains exposed to the rising frequency and severity of Australian weather events.
Suncorp CFO Jeremy Robson said, “As previously flagged, we continue to review our program against our reinsurance framework with the key objectives of optimising capital efficiency relative to our cost of equity and managing volatility, all with the overarching goal of maximising long term shareholder value creation.
“Our FY26 program best met these objectives when placed in July last year, but a softening market may provide the opportunity to reassess additional cover. In the meantime, our programme provides robust protection, limiting exposure to the need for reinstatements, as well as drop down cover against large events in 2H now enlivened.
“Our maximum retention for further events will be limited to $260m for a next large event, and further limited for any subsequent large events. We will continue to review our options leading up to our renewal in July this year and will update the market accordingly.”
Speaking further on whether aggregate protection might be more available this year, CEO Steve Johnston observed, “I think they’ve edged closer to availability every year, and by definition that’s usually the case. We would like an aggregate cover in our arsenal.
“Since we divested the bank, obviously, that’s amplified volatility across the group, and so, an aggregate cover would be something that we would have always aspired to.
“Twelve months ago, when we went through the process of pricing it and seeing whether it was a commercially available product, a sensible product in the market, we couldn’t make it work.
“Our anticipation is that the continued softening of those markets and the profitability of the reinsurers across the broader catastrophe covers that we’re offering, will put us proximate to that availability. Now we’ve got to go through that process.
“We firmly believe that as a primary insurer we don’t have the opportunity to pick and choose what markets we play in, in this country. And so we have a fantastic reinsurance panel with great partners, and we’d like to see some support to provide that volatility protection, which we think is the last part of this story.”
