Insurance Premiums Rise

As of last year, there have been catastrophe-related insured losses that amounted to US$76 billion.

This worldwide phenomenon has caused insurance companies to revisit their products’ premiums. The catastrophes in Queensland include the heavy flooding in northern Victoria and southern New South Wales, heavy rains, and Christchurch earthquake.

Insurance company Suncorp is one of those insurance companies that announced a slight increase in their premiums for the cost of catastrophe reinsurance cover. Checking Suncorp’s last fiscal year, there already is a 13 percent increase in home insurance premiums.

Queensland insurer spokesperson Jamin Smith explained that the higher premiums last year were due to the high cost of reinsurance. This year, it remains to be seen whether the higher premiums will affect the fiscal year.

Despite of the fact that the upper limit of the main catastrophe program was reduced from $5.8 billion to $5.3 billion, Suncorp foresees that the premium increase will happen.

Suncorp is also reported to have made an agreement with Warren Buffet’s Berkshire Hathaway to lessen its exposure in the Queensland market. With the arrangement, Suncorp shall pay out the proportional claims while thirty per cent of its premiums in Queensland will be for Berkshire Hathaway.

Jamin Smith further explains that although there are no major catastrophes recently, there are still some minor events that contribute to the claim costs.

According to Patrick Snowball, the new reinsurance plan would provide similar protection levels to the 2012 financial year program. The Suncorp chief executive added that it also supports the company’s medium-term objectives.