Suncorp tips more price rises as fires, floods, theft drive insurance costs up
Insurer Suncorp banked a $1.8bn profit, announcing plans for a $400m buyback. Premiums for general cover will keep rising in 2025-26 blamed on a combination of legal tactics, psychological claims and a spate of luxury car crime in Victoria.
Policyholders are wearing the consequences of an outbreak of luxury car theft in Victoria which is pushing up expensive motor claims according to the boss of Suncorp, exacerbated by aggressive legal tactics and psychological injury bills.
Steve Johnston said Suncorp was concerned that some legal groups were worsening affordability in the car insurance sector by encouraging and enabling larger claims.
“I’m not going to call it claims farming, but that’s been seen more in these schemes,” he said.
About a third of the increase in insurance costs had come through these legal avenues, while another third was represented by psychological damage incurred in accidents.
He also pointed to a surge in high-end vehicle thefts in Victoria.
“It’s reasonably obvious in the context of theft in a motor insurance premium,” Mr Johnston said by way of explanation.
Jacinta Allan’s Victoria has been a recurring feature of the 2024-25 earnings season, where CEOs like SGH’s Ryan Stokes have lamented its lower growth.
Ruling off $1.4bn in cash earnings on Thursday, Suncorp was riding high on a nearly $880m jump in premiums amid price rises in home, motor, and commercial insurance policies.
Suncorp’s general insurance division grew the size of its book by 6.3 per cent over 2024-25.
More price rises are coming, and the insurer forecast “mid-single digits” premium increases in the year ahead.
This comes after Suncorp’s consumer portfolio boosted premiums in its home division 9.4 per cent and motor by 7.4 per cent.
Suncorp was still experiencing a flood of home insurance claims for burst flexi pipes, many in hard to reach places causing a blowout in repair costs. He said many of these pipes required entire floors to be replaced in houses that were often open-plan style new builds.
This was along with an explosion in lithium battery fires, with April and May the worst months ever recorded by Suncorp for large loss fires.
The increase in solar subsidies was seeing larger lithium batteries installed in more houses, some of which explode and cause devastating damage.
He said people had to understand the design choices being made in houses had costs, and customers would vote with their feet for insurers that recognised improvements to make houses safer and less susceptible to damage.
“That’s one of the reasons we’re building agile cloud based digital systems, otherwise insurance companies will come and cherry-pick the market,” Mr Johnston said.
Commercial insurance grew 7.3 per cent, while personal injury was up 6.4 per cent.
However, Suncorp’s New Zealand business achieved only 1.3 per cent premium growth.
In the wake of the devastating floods that hammered Australia’s east coast in 2022 and again more recently, Suncorp had repriced much of its book to account for the increased risk of flood damage.
He said many of the homes deemed flood risks, which previously represented 1-2 per cent of Suncorp’s insurance book, were no longer covered.
“They are areas that have had 5 major floods in 20 years, it's very difficult to insure ones that have had a 1 in 5 or 1 in 20,” Mr Johnston said.
Suncorp undershot its natural catastrophe losses by $205m this year, coming in at $1.355bn.
Despite this, Suncorp again upped its budget for catastrophe losses to $1.7bn.
Mr Johnston described a preference to grow organically as Suncorp steered clear of three insurance deals that hit the market this year, with RACQ and RACWA picked up by rival Insurance Australia Group. Allianz scooped up RAA in South Australia.
Mr Johnston said Suncorp didn’t see value in those acquisitions.
Suncorp declared a 49c final dividend, taking total returns to 90c, or 70.8 per cent of cash earnings.
The insurer also declared it would run a $400m share buy back, starting in September.
Shares in Suncorp were up 3.6 per cent to $20.77.
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