Suncorp sees profit drop because of increased natural disaster claims

There's been a series of disasters over the last year.
There's been a series of disasters over the last year. Photo credit: Mike King.

One of the country's biggest insurers has reported a 17 percent drop in annual profit because of increased natural disaster claims.

Suncorp New Zealand, which has the Vero, Asteron Life, and AA Insurance brands, has posted an after tax profit of $215 million as claims payouts increased.

Chief executive Jimmy Higgins said the general insurance division's profit fell 19 percent to $177m as it was hit by a succession of natural disasters, costing it $45m more than the year before, and exceeded its full year allowance by $27m.

"The New Zealand result was significantly impacted by natural hazard claims costs associated with the recent Auckland Tornado as well as the floods in Napier, Northland and Canterbury."

Premium income was up 7 percent driven by new business, and retaining current customers with motor, home and commercial policies.

The life insurance operation posted a slightly reduced profit of $38m, although premium income was up 4 percent as it earned new business through third party brokers and investment advisors.

Higgins said the underlying business remained strong and it was looking to increase revenue through greater use of digital platforms and new business, while holding costs.

"We're seeing unit growth in both our direct channel and the broker-intermediated lines, and solid new business growth and retention in our life insurance business."

The company was among 42 insurance firms surveyed by the Financial Markets Authority recently, and it did not meet the FMA's standards of reporting or preparedness. The review has brought to light instances of overcharging, which companies are repaying and compensating affected customers.

Higgins said the group was part way through an upgrade of its systems and practices for improving services to consumers and settling disputes.

"Over the last two years we have significantly improved our own operations, but also the focus we want to put on our customers."