Insurer upbeat despite tipped easing
AUCKLAND: Suncorp New Zealand will manage its costs more closely in the coming year as the insurer thinks deeply about its pricing, although chief executive Paul Smeaton is still upbeat about the expected moderation in economic growth.
The local unit of Brisbanebased Suncorp Group lifted annual profit 70% to $148 million in the June 2018 year, bolstered in part by raising premium prices in response to higher reinsurance costs and attracting new customers.
The insurer, whose brands include Vero Insurance and Asteron Life, expects gross written premium growth in the low single digits for the coming year after an 8.2% gain to $1.54 billion over the past year.
‘‘What we’re very focused on is management of claims and costs,’’ Mr Smeaton said.
‘‘We have to think very carefully about affordability of pricing.’’
He expected topline revenue growth to slow as New Zealand’s net inbound migration continued to taper off. The country’s expanding population has underpinned economic growth in recent years and been a boon for general insurers as a rising number of motorists seek cover for their vehicles.
Mr Smeaton said even if the economy slowed, ‘‘our outlook is actually still quite positive for New Zealand’’.
That echoed others, ASB Bank chief executive Vittoria Shortt saying last week ‘‘New Zealand’s sound economic fundamentals have contributed to a positive operating environment’’ with low unemployment, strong terms of trade and a resilient housing market.
Chief executives in a KPMG survey last week tended to register a ‘‘slight softening’’ in confidence, but are far more upbeat than wider business confidence surveys, which are the most pessimistic they’ve been since the global financial crisis a decade ago.
Those surveys are being taken seriously by policymakers, Treasury noting the pessimism and other data raised risks of slower economic growth than predicted in the May Budget.
Suncorp NZ’s focus on pricing comes after premiums were raised last year as insurers passed on higher reinsurance costs they bore as a result of the Kaikoura earthquake in 2016.
Government data shows dwelling insurance prices climbed 18% in the June quarter from the same period a year earlier, contents insurance was up 5.9% and vehicle insurance rose 5.7%. — BusinessDesk