
In the latest deluge, Sunshine Coast-based Youi, which has compulsory flood cover, had received almost 5000 claims. Mr Schreuder said the volume of claims, mixed with pandemic-induced supply shortages in materials, raised the pressure on home margins.
His comments about potential double-digit percentage increases in pricing comes after major industry players pushed through high single-figure or double-digit rises for home insurance in the past year.
It far outstrips normal inflation and has been blamed on a spate of natural disasters and the industry entering a “hardening” cycle, in which pressure is on prices moving upwards.
Another contributing factor will be any higher costs for reinsurance protection, which is insurance for insurers in disasters.
Mr Schreuder said Youi would be protected in this latest event with its “aggregate” reinsurance. Aggregate cover switches on after a cumulative number of smaller wild weather events. Youi had already hit this trigger before the flooding, and the cover limits its subsequent exposure to $2 million for each event.
However, one issue being discussed was how many “events” were in this deluge, Mr Schreuder said. Suncorp on Wednesday said the disaster would be treated as four separate weather events for its reinsurance purposes.
Mr Schreuder said any further reinsurance price increases would depend on whether those companies viewed this latest deluge as a rare event, such as a one-in-200-year flood, or part of Australia’s permanent disaster landscape.
He also agreed with Suncorp chief executive Steve Johnston’s comments that government should support mitigation measures, and that the deluge had proven difficult for insurers to predict. Mr Schreuder said it was very difficult “from an underwriting perspective, to be on the front foot with events like this”.
He was speaking as Youi’s parent company, South Africa-based Outsurance, published financial results showing Australian operations had posted a 69 per cent fall in operating profits to $15 million for the past six months.
The fall was linked to natural catastrophes such as the Melbourne earthquakes and hail. The impact was intensified with Youi switching its catastrophe reinsurance cover – used for major wipeouts – to kick in after $30 million, compared to the previous $10 million. Youi had compensated for that with the aggregate reinsurance cover, and said it probably meant it would be “well insulated” from natural perils in the second half of the financial year.
Gross written premiums – measuring changes in customers and pricing – jumped 26 per cent to $555 million. That was partly driven as Youi teamed up with broker-focused underwriting agency Blue Zebra, and moved into compulsory third-party insurance.
It indicates Youi could meet growth targets, set in 2017, for GWP to reach $1.1 billion in 2022. “We’re back into good growth territory,” Mr Schreuder said. “As a …….