Suncorp NZ adds $15 million to compensation kitty for Kiwi households
Monday, 9 August 2021
Suncorp New Zealand blamed a 17 per cent drop in profit on a $45 million spike in extreme weather claims, but its bottom line also took a $15m hit from having to set aside money to compensate customers.
The Australian ASX sharemarket-listed insurer, which owns Vero and a majority stake in AA Insurance, announced a net profit after tax of $215m for the 12 months to June 30, 2021.
Chief executive Jimmy Higgins said the company was significantly affected by the recent Auckland tornado, which cost it $9m, as well as the floods in Napier, Northland and Canterbury, which cost $18m, $11m and $14m respectively.
But in its presentation to investors on the ASX, Suncorp said it had increased by $15m the amount it had set aside to compensate customers for incorrectly calculating customer discounts.
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This related to car and home insurance, for which customers often get discounts for having more than one policy with Suncorp.
The insurer said it continued to investigate potential issues, and the amount it had set aside for remediation could change.
“The remediation of affected customers is ongoing,” the insurer said in its annual report released to the ASX.
In last year’s presentation to the ASX, Suncorp said it had provisioned $24m for customer remediation in New Zealand.
Just last month, the Financial Markets Authority published a critical “conduct” review of general insurers.
The review resulted in insurers confessing to overcharging some customers, sometimes wrongly charging late premium payment fees, and not giving promised “multi-product” discounts to people who bought house, contents and car insurance from them.
At the time, Clare Bolingford, the FMA’s director for banking and insurance, said: “I suspect many of these issues would not have been identified without the FMA requiring insurers to review their products and policies.”
Bolingford said only two of the 42 house, contents, car, business, travel and health insurers had done what the FMA had asked of them in the review, which began in 2019, naming them as Medical Assurance Society and IAG, which is Suncorp's biggest rival in the house and contents market.
IAG owns the State, AMI and NZI brands.
Higgins that the underlying performance of Suncorp New Zealand was strong despite the spike in extreme weather events.
As well as the three floods in Northland and Napier last year, and Canterbury this year, and the tornado in Auckland, Suncorp had paid $6m in claims for the South Island hailstorm in December, and another $6m in claims for the Lake Ohau bushfire in October last year.
Suncorp had foregone some income during the national Covid lockdown last year by reducing premiums for people with car insurance, and providing financial support to customers who experienced financial hardship.