Suncorp reduces disaster liability
SUNCORP has sliced the size of its maximum protection against major natural disasters.
SUNCORP has sliced the size of its maximum protection against major natural disasters.
It follows Suncorp negotiating a partnership with Warren Buffett's insurance firm Berkshire Hathaway.
Insurers take their own protection via reinsurance companies. Reinsurance protection caps an insurer's payout in a major disaster, such as earthquake or flood, to a set amount.
Suncorp, whose brands include AAMI and Apia, yesterday revealed its reinsurance contained an upper limit of $5.3 billion. In 2011, it was $5.8 billion.
The latest move was prompted by Suncorp cutting a deal with an insurer, understood to be Berkshire Hathaway, to underwrite 30 per cent of its share in the Queensland home insurance market.
The deal is designed to offset Suncorp's risk, given it has a ``significant share of the Queensland home market''. It would still process insurance claims.
The new reinsurance package also sees Suncorp abandon ``aggregate'' reinsurance which last year covered a rash of events costing between $10 million and $90 million. It dovetailed with reinsurance capping damage from one-off big events at $250 million.
This year's reinsurance only carries one-off event protection.
Suncorp's bill for a first disaster is capped at $250 million, but drops to $200 million for a second event and $50 million for a third and fourth.
Suncorp noted a "moderate'' increase in the cost of reinsurance. It paid $806 billion in 2011.
Reinsurer Munich Re last week said global losses from natural catastrophes of $US26 billion ($A25.4 billion) during the past six months were "well below'' averages of $US75.6 billion ($A74 billion) in recent years.