Suncorp chair Christine McLoughlin calls on government to help keep premiums affordable

The company, which is set to become a pure insurer in the coming months, has called on governments to remove inefficient taxes and charges to keep insurance affordable amid global pressures.

Suncorp says governments needs to work with industry to keep insurance affordable for Australians facing cost of living pressures as extreme weather events, coupled with supply chains woes, drive global reassurance prices up.

The ASX-listed group is increasingly turning its focus to insurance as the $4.3bn sale of its banking division to ANZ near completion, which chair Christine McLoughlin says will allow it to simplify amid increasing instability in the world.

Ms McLoughlin told The Australian that reducing taxes added by government to insurance premiums was crucial to keeping insurance affordable to Australia at a time when cost of living pressures have surged.

Insurers have passed on hefty price rises to households in the past year which has added to inflation. The Australian Bureau of Statistics said that insurance inflation was 8.1 per cent in the past year – among the biggest increases of any bucket – compared to the 4.1 per cent overall inflation reading.

Costs have increased following recent natural disasters, including the 2022 floods in South East Queensland and northern NSW, which Ms McLoughlin was the second-largest insurance disaster on record with more than 240,000 insurance claims with a total value of $6bn, along with supply chain disruption driving up building expenses.

“All those factors become relevant when you are looking at pricing and insurance risk,” she said “Government taxes have also had a significant impact to insurance premiums.”

Ms McLoughlin recognised that rising premiums have been a real burden for households and backed the recent decision by the NSW government to offer relief in the Fire Services Levy, which would help to stem premium pressures. But she noted many customers were sticking with their insurance, in a good indication of the importance households were placing on insurance and the protection it offered.

Flooding events such as occurred in Lismore in 2022 have added to insurance costs. Picture: Dan Peled/Getty Images

“If we can reduce the taxes paid on policies, that would be a big factor the government could assist in reducing premiums. It is really important momentum to keep going, and governments recognise that if insurance is not there, then these costs fall on the government,” Ms McLoughlin said on the sidelines of her keynote speech at the QUT Business Leaders Forum in Brisbane on Tuesday.

“We’ve both got an aligned goal of sustainability of the insurance industry, and also resiliency mitigation to reduce the costs to governments.

Ms McLoughlin said that making insurance more affordable could not fall to any one party, with it important that government, industry and the community working together given an increase in natural disasters and other risks. Suncorp has advocated for investment in mitigation infrastructure, encourage homeowners to make dwellings more resilient, overhaul the building code to ensure that new communities are not at risk in addition to removing inefficient taxes and charges on insurance.

“We need to be working together for the long term good. Otherwise, as a nation, we risk being at the mercy of external shocks rather than taking charge of our future,” she said.

The operator of AAMI, GIO, Bingle, Vero and several other brands, Suncorp is a sprawling insurer across the Australian and New Zealand markets with a banking arm widely expected to be sold to ANZ. Suncorp is due to complete the $4.3bn sale of its banking division to ANZ by the middle of the year after the Australian Competition Tribunal overturned objection from the competition regulator the ACCC.

Ms McLoughlin said that the sale of the banking division is not only a win for its home state of Queensland, but would allow Suncorp to focus on being a pure insurer amid growing instability in the world.

“Our CEO Steve Johnston has been driving a simplification agenda for five years now. And this is next phase of becoming a pure Trans Tasman insurer, will mean that we can invest more in the technology and digital transformation of our business.” she said. “It means that we can become best in class and not compete for capital across the group between the bank and the insurer.”

The state of the Australian economy was also in strong and holding up well under the weight of rapid increase in interest rates and inflationary pressures, according to Ms McLoughlin, who noted that savings amassed during the pandemic had helped to shoulder the burden.

“The mindset around the importance of savings that came out of the pandemic period has put households in a position of strength to go through the rate cycle,” she said.

Suncorp.

In its half-year results, Suncorp noted that it would continue to push premium growth in the “low to mid-teens” over the remainder of the year across its insurance arm, in a bid to respond to costs. Home premiums ­lifted 12 per cent in the six months to December, while motor rose 18.2 per cent.

Originally published as Suncorp chair Christine McLoughlin calls on government to help keep premiums affordable