Suncorp says it is considering innovative reinsurance structures for managing risk exposures.

“We have set up a comprehensive program to do a full market scan of all reinsurance opportunities available to us,” CFO Jeremy Robson said at an investor update last week.

He said any new arrangement will need to be available for “the foreseeable future”, including on renewal at the end of any fixed term.

“While we are mindful of the benefit of reduced volatility, it is important that our reinsurance arrangements create long-term shareholder value,” he said. “They need to work and make sense.”

Mr Robson said while major reinsurers have shown a lack of appetite for “volatility covers”, they are still available in parts of the market. Brokers at the rendezvous in Monte Carlo pushed reinsurers on availability of the cover.

Reinsurance is just one consideration for Suncorp around managing volatility, with other actions including accelerating out of higher-hazard risks and into lower risks, Mr Robson said.

“One of the things that we are doing very actively in the home portfolio, which is where most of that natural hazard volatility comes though, is quite actively trying to manage our exposure to what we call high, medium and low risks.”

Consumer insurance CEO Lisa Harrison told the investor day sophisticated pricing capability is allowing Suncorp to assess at an individual property level, and to price and improve its mix by growing in locations where the natural hazard risk is lower.

“This shift is under way,” she said. “We see this in strike rates for the low natural hazard risk segment, which are higher than for the high-risk segment by about 13 percentage points.”

Suncorp also outlined a $560 million “digital insurer” platform modernisation program and the use of artificial intelligence to improve operations as it looks to the next stage of growth following this year’s banking business divestment.

The platform modernisation funds will be mostly spent through to the end of fiscal 2027 as portfolios are migrated, the company said.

Group CEO Steve Johnston said the strategy aims to improve delivery of contemporary and affordable products to keep pace with evolving customer expectations.

“Claims processes will become frictionless but with enhanced safety nets to manage complexity and vulnerability,” he said. “Alongside this, process and operational efficiency will reduce the burden on pricing when input costs rise.”

Mr Johnston said the investment will allow Suncorp to better leverage its scale benefits in a competitive market involving established large-scale insurers using older technology and emerging smaller players with “greenfield” technology.