Suncorp’s general insurance business is performing ahead of expectations and is targeting a 12% underlying insurance margin this financial year, says CEO Patrick Snowball.

He told an investor briefing last week that Suncorp Group is on track to achieve $235 million in annual savings by June next year.

He says the group’s simplification program – unveiled at the briefing – will deliver an extra $200 million of annual benefits from 2016. 

Mr Snowball says Suncorp has its pricing right, and although the company is a year behind where he would like it to be he is confident about the medium-term outlook.

He says costs are under control and the business is growing. This year’s 12% targeted insurance margin compares with 10.8% last financial year.

Mr Snowball says the $275 million simplification program will address 15 years of acquisitions, mergers and integrations that have resulted in a “patchwork” of systems and processes that make the group unnecessarily cumbersome.

“Complexity and duplication have not been addressed,” he said.

The group plans to decommission 14 legacy pricing systems in general insurance and consolidate its five licences, which Mr Snowball says will improve customer service and position the division for when the new life and general insurance capital requirements come into force. There is no information on staff cuts.

He says the rollout of the general insurance pricing engine has improved margins on personal and commercial lines significantly and the vehicle repair centres are close to repairing 100,000 cars a year and saving almost $400 a car.

Suncorp Commercial Insurance CEO Anthony Day says the group is in the middle of negotiating its reinsurance and is well placed in an environment where reinsurers are examining underwriters more closely.

Although there is a lot of capacity in the market, he says reinsurers have become more focused on where they are prepared to put that capacity and are looking at underwriters’ claims management and pricing engines.

“I am confident capacity won’t be such a big issue for us this year,” he said.

Mr Snowball says Vero NZ spent the last year handling Christchurch earthquake issues and is coming to terms with the resulting transformation in the New Zealand market.

“By the February results we will be in a position to articulate where we are taking Vero NZ,” he said.