Suncorp’s short-term profitability has been impacted significantly by the year’s natural disasters, but the group’s general insurance business is working towards an increase of at least 3% in underlying margin by next financial year, CEO Patrick Snowball told an investor briefing in Sydney this morning.

He says the “headwinds” of the two-speed economy have affected the group’s banking and life insurance arms, and the cost of acquiring more reinsurance has also had an effect.

Suncorp Personal Insurance CEO Mark Milliner told investors the industry was “severely tested” over summer, and it is unacceptable for politicians and bureaucrats to cause further delays in disaster-proofing Australian communities.

He says catastrophes are “as much about poor planning as they are about weather events themselves”.

Mr Milliner says the Personal Insurance division has completed its move to a centralised pricing team, and has imposed premium increases to account for recent weather events. Suncorp now has one team, one pricing approach and one claims model over all its personal lines brands, which means it can compete more effectively, has reduced churn and improved margins.

In the first half, the division achieved a premium increase of 10% in home insurance and around 2.5% in motor insurance compared with the first half of 2010.

Commercial Insurance CEO Anthony Day says the commercial business has laid the foundations for contributing to an improved margin. There are “preliminary signs” of hardening in various commercial insurance lines, “but no longer do we expect traditional hard and soft insurance markets to deliver the volatility they used to”.

Capacity and competition continue to be factors, but more sophisticated pricing and risk selection will also contribute to flattening the cycles.

Commercial Insurance is building growth “but not at the expense of profit”, focusing on cost and expanding margin on products.

Mr Day says he is convinced the SME segment can generate significant growth but there is significant competition.

“Our focus is firmly on profitable growth, and as I continue to remind my team, we’re only interested in good growth.”

B2B technology platforms which make it easier for both brokers and business owners to deal with Suncorp remain key to the strategy. Mr Day says brokers remain critical to growth, with two-thirds of business coming via intermediaries.

He says Suncorp is pricing risk more accurately with its general insurance pricing engine.

“Tomorrow’s successful insurers will be those who are most sophisticated in pricing and risk selection,” he said.

Mr Snowball also told the meeting Suncorp plans to double its scale and profit footprint in New Zealand over the next three years.