Kaikoura earthquake shakes insurer
The Kaikoura earthquake combined with cyclones Debbie and Cook to hit the bottom line of giant insurer Suncorp New Zealand.
The New Zealand arm of Australian insurer Suncorp, which includes Vero and AA Insurance, announced a profit after tax of $87 million in the 12 months to the end of June compared to a $200m profit in the previous year.
That didn’t stop Suncorp NZ’s Australian parent company from reporting an increased after-tax profit of A$1.075 billion (NZ$1.15b), up 3.6 per cent on the previous year.
The result capped off a disappointing year for Suncorp New Zealand, which saw its attempt to take over rival insurer Tower stymied by the Commerce Commission.
Despite the dip in profits, Suncorp New Zealand chief executive Paul Smeaton said growth in premium revenue was strong.
And, he said, the insurer was making rapid progress in settling the claims following the Kaikoura earthquake and aftershocks, and also the flood damage after the cyclones.
‘‘The general insurance business continued to outperform the New Zealand market in relation to gross written premium growth, and we’re making good progress settling claims from the Kaikoura earthquake and the Edgecumbe floods,’’ Smeaton said.
By the end of June 2017, 63 per cent of claims had been assessed.
He noted however, that additional claims from the Christchurch earthquakes of 2010 and 2011 continued to come through.
Another drag on performance was the rising cost of fixing cars damaged in crashes, and the rising number of crashes Kiwis were having.
It was working to control repair costs, and opened an additional two motor repair centres during the year – one in Auckland and one in Christchurch – to improve turnaround times on repairs and
"We're making good progress settling claims from the Kaikoura earthquake and the Edgecumbe floods." Suncorp New Zealand chief executive Paul Smeaton
reduce the cost of motor insurance claims.
‘‘A trend in motor claims cost inflation, experienced across the industry, also contributed to the lower result,’’ Smeaton said.
In total, New Zealand households and businesses paid Suncorp businesses $1.424b in premiums in the 12 months to the end of June, a rise of 6.3 per cent on the previous year.
In total, the insurer paid claims of $735m in New Zealand.
Smeaton reiterated Suncorp’s disappointment that the Commerce Commission had declined its bid to buy Tower, but said Suncorp would review the decision before saying whether it would challenge the decision in court.
Suncorp owns the Asteron life insurance business in New Zealand, and was seeking a partner to launch into the health insurance market.