Suncorp boss Steve Johnston calls for new insurance for flood zones, tips plans to push into apartment market
Steve Johnston, the chief executive of the general insurer, talked up a plan to partner with governments to offer a basic level of cover to homeowners in flood zones and problematic areas.
Australia needs a new class of insurance that low-income people and homeowners exposed to flood zones can afford, Suncorp boss Steve Johnston says, offering to partner with governments to insure the vulnerable.
Insurance has barely innovated in fifty years, he said, speaking on the sidelines of the ASIC annual forum in Melbourne.
But such a scheme could not mask the true danger of owning these homes or the cost to repair them.
“We want to make sure there’s still enough of a signal to the consumer that there are things that they can do to improve the quality of their home,” he said.
“I do think the products we sell today are the same products we sold 50 years ago.”
Suncorp also wants to send a message to the government to continue investing in flood and danger mitigation efforts, not just subsidise insurance costs.
“The solution for all these issues is for investment in resilience and mitigation, stopping the claims from occurring in the first place and we don’t want to put in place anything that stops investment from occurring,” Mr Johnston said.
The Suncorp boss suggested Australia had to follow New Zealand’s lead in its Managed Retreat scheme and buyback and demolish homes deemed to be at extreme risk.
“It’s difficult, because consumers, customers, do not want to move,” he said. “But if there’s no insurance sitting behind it there’s no ability to rebuild their home.”
Mr Johnston hoped Australia would “steer into that uncomfortable truth” that people or even entire towns and communities had to relocate.
The NSW government is planning to buyback as many as 1500 homes in high risk flood areas in the state’s Northern Rivers region. But only 732 houses have been purchased so far, through the $880m program.
Mr Johnston said a key issue was the cost of new housing, with high house prices driving higher premiums and contributing to the affordability issue.
He echoed the call from Westpac chief executive Anthony Miller that more homes should be built around the $500,000 sticker price. “The $500,000 to $750,000, that’s the sweet spot,” he agreed.
“But I make the point, there’s no point in having a $500,000 home if it’s on a flood plain because it’s going to flood and you won’t get insurance.”
The insurance sector also had a challenge to meet in how it provided cover to apartments.
“It’s another example where the industry has sort of stepped back,” he said. The strata insurance, or body corporate insurance market, has faced a shake-up amid criticism of opaque fees and limited choice.
The Suncorp CEO said the insurance industry had to get better at offering strata cover.
But Mr Johnston admitted Suncorp was not writing many policies covering apartments, finding the market to be unprofitable and costly.
He said Suncorp couldn’t price its policies high enough, given how many claims were incurred. The company is examining a new product it could offer to apartments which it hoped to sell directly to owners corporations.
Suncorp reported a $1.49bn cash profit for the 2025 financial year up from $1.37bn and is buying back up to $400m of its own shares.
Mr Johnston said while it may seem Suncorp was earning ballooning profits, the insurance sector was cyclical meaning there were periods when it would under-earn.
Last month, Suncorp revealed wild weather in October would attract claims of $220m-$260m.
Mr Johnston said the insurer had improved its handling of customers in distress, after being pinged for a backlog linked to the 2022 floods. The industry had to acknowledge it still had issues and too many customers approached it with caution, he added.
The Suncorp boss said insurers had a perception problem leading customers to consider claims as an “adversarial” matter. This was an indictment on the industry he wanted to change.
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