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One of Australia’s largest insurers will increase premiums by up to 9 per cent this financial year as labour shortages, inflation and extreme weather continue to push up insurance costs for customers.
Suncorp, the parent company of brands including AAMI, GIO and Apia, said on Monday that insurance premiums had “moderated” over the past six months, but warned that costs associated with home repairs following extreme flooding and bushfires in recent years were putting further pressure on its business.
Suncorp chief executive Steve Johnston said insurance premiums would rise by 9 per cent. Credit: Paul Harris
Over the past five years, Suncorp has dealt with 700,000 claims totalling more than $9 billion, affecting the price of reinsurance and the amount of natural catastrophe reserves it sets aside.
Those input costs added $1 billion to the company’s profits, which were passed on to customers. Rising insurance costs became the biggest factor in inflation after severe flooding across the country in 2022 caused premiums to soar.
While annual inflation fell to 3.8 per cent in the June quarter, insurance costs rose 14 per cent, down from a high of 16.4 per cent in the same period last year, according to the latest Australian Bureau of Statistics consumer price index data.
“As we see (auto insurance) inflation trends start to moderate, meaning inflation rates are moving from the low double digits to the high single digits, our premiums will adjust accordingly,” said CEO Steve Johnston.
“For home insurance, it’s a little more complicated because we’re seeing an increase in the severity of flooding inside homes and more severe fire damage.”
Johnston said lithium batteries had exacerbated house fires, increasing claim costs, while flexible water pipes installed more than a decade ago burst, flooding homes and causing extensive damage.
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